Surgical implantation of decellularized cadaveric arteries is routinely used to treat right-sided congenital cardiac lesions. These acellular conduits lack the capacity for somatic growth and are prone to stenosis and calcification, necessitating multiple operations throughout childhood. Islet-1+ cardiovascular progenitor cells (CPCs) have demonstrated the capacity for differentiation into all cell types of the heart and outflow tracts. We hypothesize that CPC seeding of decellularized pulmonary arteries and bioreactor culture under physiologic flow conditions will drive vascular differentiation of CPCs and result in a conduit more suitable for implantation and long-term growth. We began by decellularizing ovine pulmonary arteries and characterizing the composition of the extracellular matrix (ECM). Hemodynamic testing of decellularized vessels in a custom bioreactor was used to define the scaffold mechanical properties over a range of pressures and flow rates. Next, our expanded ovine CPCs were suspended in growth media and injected intramurally into decellularized pulmonary arteries that were subsequently cultured in either static or pulsatile cultures. A combination of immunohistochemistry, real-time polymerase chain reaction (PCR), and tissue bath contraction studies were used to evaluate the bioengineered arteries before transplantation. Pulmonary artery patches from the most favorable culture conditions were then implanted into juvenile sheep to provide proof of concept. Hematoxylin and eosin staining indicated complete removal of cell nuclei (n = 9), whereas double-stranded DNA isolation from tissue homogenates showed 99.1% DNA removal (p < 0.01, n = 4). Furthermore, trichrome and elastin staining verified maintenance of collagen and elastin. Immunohistochemistry and PCR analyses (n = 4 per group) confirmed contractile smooth muscle presence on only our 3-week pulsatile scaffolds via presence of calponin 1 and myosin heavy chain 11. Tissue bath studies demonstrated that smooth muscle contraction generated by our 3-week pulsatile scaffolds (2.23 ± 0.19 g, n = 4) is comparable with native tissue contraction strength (2.78 ± 0.06 g, n = 4). Ovine transplantation confirmed that our graft can be safely implanted, retains contractile smooth muscle cells, and recruits native endothelium. Longer duration of physiologic pulsatile culture drives differentiation of CPCs seeded on ECM conduits toward a mature, contractile phenotype that is maintained for several weeks in vivo. Longer term studies to assess somatic growth potential are needed. Impact statement The current field of vascular transplantation relies on cadaveric and synthetic grafts to treat right-sided congenital cardiac lesions. These grafts do not grow somatically with our patients. This results in multiple reoperations throughout childhood to increase the size of the graft. Our bioengineered alternative demonstrates successful implantation, contractile smooth muscle cells, and a native endothelial layer. This research demonstrates a pilot study confirming the viability of a bioengineered alternative to the current standard of care in the field of vascular transplantation.