Bone tissue engineering (BTE) is a promising alternative to autologous bone grafting for the clinical treatment of bone defects, and inorganic/organic composite hydrogels as BTE scaffolds are a hot spot in current research. The construction of nano-hydroxyapatite/gelatin methacrylate/oxidized sodium alginate (nHAP/GelMA/OSA), abbreviated as HGO, composite hydrogels loaded with bone morphogenetic protein 7 (BMP7) will provide a suitable 3D microenvironment to promote cell aggregation, proliferation, and differentiation, thus facilitating bone repair and regeneration. Dually-crosslinked hydrogels were fabricated by combining GelMA and OSA, while HGO hydrogels were formulated by incorporating varying amounts of nHAP. The hydrogels were physically and chemically characterized followed by the assessment of their biocompatibility. BMP7-HGO (BHGO) hydrogels were fabricated by incorporating suitable concentrations of BMP7 into HGO hydrogels. The osteogenic potential of BHGO hydrogels was then validated through in vitro experiments and using rat femoral defect models. The addition of nHAP significantly improved the physical properties of the hydrogel, and the composite hydrogel with 10% nHAP demonstrated the best overall performance among all groups. The selected concentration of HGO hydrogel served as a carrier for BMP7 loading and was evaluated for its osteogenic potential both in vivo and in vitro. The BHGO hydrogel demonstrated superior in vitro osteogenic induction and in vivo potential for repairing bone tissue compared to the outcomes observed in the blank control, BMP7, and HGO groups. Using hydrogel containing 10% HGO appears promising for bone tissue engineering scaffolds, especially when loaded with BMP7 to boost its osteogenic potential. However, further investigation is needed to optimize the GelMA, OSA, and nHAP ratios, along with the BMP7 concentration, to maximize the osteogenic potential.