Repair of large calvarial bony defects remains clinically challenging because successful spontaneous calvarial re-ossification rarely occurs. Although bone marrow-derived mesenchymal stem cells (BMSCs) genetically engineered with baculovirus (BV) for transient expression of osteogenic/angiogenic factors hold promise for bone engineering, we hypothesized that calvarial bone healing necessitates prolonged growth factor expression. Therefore, we employed a hybrid BV vector system whereby one BV expressed FLP while the other harbored the BMP2 (or VEGF) cassette flanked by Frt sequences. Transduction of rabbit BMSCs with the FLP/Frt-based BV vector led to FLP-mediated episome formation, which not only extended the BMP2/VEGF expression beyond 28 days but augmented the BMSCs osteogenesis. After allotransplantation into rabbits, X-ray, PET/CT, μCT and histological analyses demonstrated that the sustained BMP2/VEGF expression remarkably ameliorated the angiogenesis and regeneration of critical-size (8 mm) calvarial defects, when compared with the group implanted with BMSCs transiently expressing BMP2/VEGF. The prolonged expression by BMSCs accelerated the bone remodeling and regenerated the bone through the natural intramembranous pathway, filling ≈83% of the area and ≈63% of the volume in 12 weeks. These data implicated the potential of the hybrid BV vector to engineer BMSCs for sustained BMP2/VEGF expression and the repair of critical-size calvarial defects.