Cell-based therapy is an emerging paradigm in skeletal regenerative medicine. However, the primary means by which transplanted cells contribute to bone repair and regeneration remain controversial. To gain an insight into the mechanisms of how both transplanted and endogenous cells mediate skeletal healing, we used a transgenic mouse strain expressing both the topaz variant of green fluorescent protein under the control of the collagen, type I, alpha 1 promoter/enhancer sequence (Col1a1 GFP ) and membrane-bound tomato red fluorescent protein constitutively in all cell types (R26 mTmG ). A comparison of healing in parietal versus frontal calvarial defects in these mice revealed that frontal osteoblasts express Col1a1 to a greater degree than parietal osteoblasts. Furthermore, the scaffold-based application of adipose-derived stromal cells (ASCs), bone marrow-derived mesenchymal stem cells (BM-MSCs), and osteoblasts derived from these mice to critical-sized calvarial defects allowed for investigation of cell survival and function following transplantation. We found that ASCs led to significantly faster rates of bone healing in comparison to BM-MSCs and osteoblasts. ASCs displayed both increased survival and increased Col1a1 expression compared to BMMSCs and osteoblasts following calvarial defect transplantation, which may explain their superior regenerative capacity in the context of bone healing. Using this novel reporter system, we were able to elucidate how cell-based therapies impact bone healing and identify ASCs as an attractive candidate for cell-based skeletal regenerative therapy. These insights potentially influence stem cell selection in translational clinical trials evaluating cell-based therapeutics for osseous repair and regeneration.