Natural hydrogel scaffolds usually exhibit insufficient mechanical strength which remains a major challenge in bone tissue engineering. In this study, the limitation was addressed by incorporating regenerated cellulose (rCL) nanofibers into chitosan (CS) hydrogel. The rCL nanofibers were regenerated from deacetylation of electrospun cellulose acetate (CA) nanofibers. As-prepared rCL/CS composite scaffold showed unique porous morphology with rCL nanofibers imbibed CS matrix. The compressive strength test exhibited that the rCL/CS scaffold have higher compressive strength compared to pure CS. The rCL/CS scaffold showed increased biomineralization and enhanced pre-osteoblast cell (MC3T3-E1) viability, attachment, and proliferation. The alkaline phosphatase (ALP) and alizarin red (ARS) staining results suggested that the osteogenic differentiation ability was improved in rCL/CS composite scaffold. Hence, the novel fabrication idea and the obtained results suggested that the rCL/CS composite hydrogel scaffolds could be a promising three-dimensional bio-scaffold for bone tissue engineering.