The objective of this study was to assess bone formation from mesenchymal stem cells (MSCs) on a novel nanofibrous scaffold in a rat model. A highly porous, degradable poly(epsilon-caprolactone) (PCL) scaffold with an extracellular matrix-like topography was produced by electrostatic fiber spinning. MSCs derived from the bone marrow of neonatal rats were cultured, expanded, and seeded on the scaffolds. The cell-polymer constructs were cultured with osteogenic supplements in a rotating bioreactor for 4 weeks, and subsequently implanted in the omenta of rats for 4 weeks. The constructs were explanted and characterized by histology, immunohistochemistry, and scanning electron microscopy. The constructs maintained the size and shape of the original scaffolds. Morphologically, the constructs were rigid and had a bone-like appearance. Cells and extracellular matrix (ECM) formation were observed throughout the constructs. In addition, mineralization and type I collagen were also detected. This study establishes the ability to develop bone grafts on electrospun nanofibrous scaffolds in a well-vascularized site using MSCs.