The smallest branch of the femoral artery is the transverse branch lateral circumflex femoral artery. This branch moves laterally, or away from the midline of the body, passing over the vastus intermedius muscle of the thigh. It then passes through the vastus lateralis muscle and circles around the femur (thigh bone), where it joins the medial femoral circumflex artery, perforating arteries, inferior gluteal artery, and profunda femoris artery in the back portion of the thigh.

The artery is responsible for supplying blood to the vastus lateralis muscle in the thigh, as well as the joint of the hip. The femoral artery directly produces the transverse branch lateral circumflex femoral artery in around 14 percent of people. The transverse branch lateral circumflex femoral artery is also known to have a descending branch that delivers blood to the knee.