A critical aspect of creating vascularized tissues is the remodelling that occurs in vivo, driven in large part by the host response to the tissue construct. Rather than a simple inflammatory response, a beneficial tissue remodelling response results in the formation of vascularised tissue. The characteristics and dynamics of this response are slowly being elucidated, especially as they are modulated by the complex interaction between the biomaterial and cellular components of the tissue constructs and the host. This process has elements that are similar to both wound healing and tumour development, and its features are illustrated by reference to the bottom-up generation of a tissue using modular constructs. These modular constructs consist of mesenchymal stromal cells (MSC) embedded in endothelial cell (EC)-covered collagen gel rods that are a few hundred microns in size. Particular attention is paid to the role of hypoxia and macrophage recruitment, as well as the paracrine effects of the MSC and EC in this host response.