While it is well established that an adequate blood supply is critical to successful bone regeneration, it remains poorly understood how progenitor cell fate is affected by the altered conditions present in fractures with disrupted vasculature. In this study, computational models were used to explore how angiogenic impairment impacts oxygen availability within a fracture callus and hence regulates mesenchymal stem cell (MSC) differentiation and bone regeneration. Tissue differentiation was predicted using a previously developed algorithm which assumed that MSC fate is governed by oxygen tension and substrate stiffness. This model was updated based on the hypothesis that cell death, chondrocyte hypertrophy and endochondral ossification are regulated by oxygen availability. To test this, the updated model was used to simulate the time course of normal fracture healing, where it successfully predicted the observed quantity and spatial distribution of bone and cartilage at 10 and 20days post-fracture (dpf). It also predicted the ratio of cartilage which had become hypertrophic at 10dpf. Following this, three models of fracture healing with increasing levels of angiogenic impairment were developed. Under mild impairment, the model predicted experimentally observed reductions in hypertrophic cartilage at 10dpf as well as the persistence of cartilage at 20dpf. Models of more severe impairment predicted apoptosis and the development of fibrous tissue. These results provide insight into how factors specific to an ischemic callus regulate tissue regeneration and provide support for the hypothesis that chondrocyte hypertrophy and endochondral ossification during tissue regeneration are inhibited by low oxygen.