Three-dimensional scaffolds made of bioabsorbable polymeric constituents are currently being tested for use in tissue engineering of various tissues. A composite scaffold of poly-glycolic acid (PGA) non-woven mesh dip-coated in a 1% solution of poly-4-hydroxybutyrate (P4HB) was shown to be suitable as a scaffold for creation of tissue-engineered trileaflet pulmonic valve replacements in sheep [Hoerstrup, S.P., et al., Circulation 102(Suppl. 3), III44, 2000]. However, little is known about how cells seeded on PGA/P4HB respond in vitro to soluble factors supplied in the culture medium. To optimize tissue development in vitro, before implantation, we set out to develop quantitative biochemical assays to measure how cells seeded on PGA/P4HB respond to growth and differentiation factors. Herein we show that ovine aortic valvular endothelial cells and circulating endothelial progenitor cells (EPCs) seeded onto PGA/P4HB proliferate in response to vascular endothelial growth factor and transdifferentiate to a mesenchymal phenotype in response to transforming growth factor beta(1). Transdifferentiation from an endothelial to mesenchymal phenotype is a critical step during embryonic development of cardiac valves. Our results demonstrate that valvular endothelial cells and EPCs isolated from peripheral blood can recapitulate critical developmental steps on PGA/P4HB. These results demonstrate that PGA/P4HB provides a conducive environment for cellular proliferation, differentiation, and tissue development.