Neovascularization, angiogenesis, and collagen constriction are essential for wound healing. We tested whether vascular endothelial growth factor-C (VEGF-C) can promote collagen constriction, capillary sprouting (angiogenesis), and invasion/migration of bone marrow-derived endothelial progenitor cells into collagen (vasculogenesis). We used a recently characterized three-dimensional collagen matrix assay with either monolayers of human dermal microvascular endothelial cells (HMVECs) or bone marrow-derived endothelial progenitor cells (BMD EPCs), obtained from Tie-2 LacZ transgenic mice, overlaid with an acellular layer and then a cellular layer of collagen embedded with fibroblasts, that were nontransduced or transduced with either LacZ adenoviral vector (Ad5) or VEGF-C/Ad5. The ability of VEGF-C to enhance fibroblast-mediated collagen constriction was measured, and gels overlying HMVECs or BMD EPCs were co-cultured, harvested, and assayed for HMVEC migration, sprouting, and capillary-like formation; gels containing BMD EPCs were assayed for EPC invasion/migration into the collagen extracellular matrix. VEGF-C significantly increased collagen constriction and formation of capillary-like structures with true lumina (P < .05) assessed by von Willebrand factor and VEGF receptor-2 immunoassaying. VEGF-C induced a significant increase in HMVEC migration, tubular polarization, and branching sprouts associated with a significant up-regulation of membrane type 1 matrix metalloproteinase (MT1-MMP) ( P < .05). Fibroblasts were necessary to support BMD-EPC invasion/migration from the monolayer into the collagen. Moreover, fibroblasts overexpressing VEGF-C significantly enhanced EPC invasion/migration ( P < .05) into the extracellular matrix by two-fold, and this effect could not be achieved with equivalent levels of exogenous VEGF-C in the absence of fibroblasts. The addition of a soluble VEGF-C competitor protein only partially inhibited these responses, reducing the EPCs by three-fold, but significant numbers of EPCs still invaded/migrated into the extracellular matrix, suggesting that other fibroblast-specific signals also contribute to the vasculogenic response. Fibroblast-specific expression of VEGF-C promotes collagen constriction by fibroblasts and enhances microvascular endothelial cell migration, branching, and capillary sprouting in association with up-regulating MT1-MMP expression. Fibroblasts are necessary for BMD EPC invasion/migration into collagen, and their overexpression of VEGF-C enhances this fibroblast-mediated vasculogenic effect. Collectively, these findings suggest a role for VEGF-C in multiple biologic steps required for wound healing (angiogenesis, vasculogenesis, and collagen constriction). Ischemic wound healing remains an unsolved problem with no previously identified molecular target for therapeutic intervention. This study demonstrates that VEGF-C overexpression by fibroblasts stimulates multiple biologic processes known to impact wound healing, such as collagen constriction, capillary sprouting, and EPC invasion and migration through extracellular matrix. Most ischemic wounds fail to heal and frequently lead to major limb amputation. Available cytokine ointments are ineffective, and revascularization is often not technically feasible. Even when these procedures are accomplished, many ischemic wounds frequently still do not heal because of multifactorial tissue level impairments in the fibroblastic and neovascularization responses at the wound base. Our findings identify an important role for two novel tissue level targets, dermis-derived fibroblasts and VEGF-C, in collagen constriction, angiogenesis, and postnatal vasculogenesis from BMD EPCs. Thus the findings are particularly relevant to the unsolved clinical problem of ischemic wound healing.