Bone defects represent a medical and socioeconomic challenge. Engineering bioartificial bone tissues may help to solve problems related to donor site morbidity and size limitations. Nanofibrous scaffolds were electrospun into a blend of synthetic biodegradable polycaprolactone (PCL) with hydroxyapatite (HA) and natural polymer gelatin (Gel) at a ratio of 1:1:2 (PCL/HA/Gel) compared to PCL (9%), PCL/HA (1:1), and PCL/Gel (1:2) nanofibers. These fiber diameters were around 411 ± 158 to 856 ± 157 nm, and the pore size and porosity around 5–35 µm and 76–93%, respectively. The interconnecting porous structure of the nanofibrous scaffolds provides large surface area for cell attachment and sufficient space for nutrient transportation. The tensile property of composite nanofibrous scaffold (PCL/HA/Gel) was highly flexible and allows penetrating osteoblasts inside the scaffolds for bone tissue regeneration. Fourier transform infrared analysis showed that the composite nanofiber contains an amino group, a phosphate group, and carboxyl groups for inducing proliferation and mineralization of osteoblasts for in vitro bone formation. The cell proliferation (88%), alkaline phosphatase activity (77%), and mineralization (66%) of osteoblasts were significantly (P < 0.001) increased in composite nanofibrous scaffold compared to PCL nanofibrous scaffolds. Field emission scanning electron microscopic images showed that the composite nanofibers supported the proliferation and mineralization of osteoblast cells. These results show that the fabrication of electrospun PCL/HA/Gel composite nanofibrous scaffolds has potential for the proliferation and mineralization of osteoblasts for bone regeneration.