This work is dedicated to combining nanotechnology with bone tissue engineering to prepare and characterize electrospun gelatin/monetite nanofibrous scaffold with improved physicochemical, mechanical, and biological properties. Nanofibrous scaffolds possessing fiber diameter in the range of 242–290 nm were prepared after incorporating varying content of monetite nanoparticles up to 7 wt % into the gelatin matrix using the electrospinning technique. Cross-linking of gelatin chains in the scaffold was performed using 0.25 wt% glutaraldehyde as indicated by imine (-CN-) bond formation in the FTIR analysis. With an increase in monetite addition up to 7 wt%, a decrease in swelling ratio and bio-degradability of cross-linked gelatin scaffolds was observed. Gelatin scaffold with 7 wt% monetite content registered the highest values of tensile strength and tensile modulus of 18.8 MPa and 170 MPa, as compared to 0% and 5 wt% monetite containing scaffolds respectively. Cell viability and differentiation were studied after culturing MG-63 cells onto the scaffolds from confocal microscopy of live and dead cells images, MTT assay, and alkaline phosphatase assay for a cell culture period of up to 21 days. It was observed that 7 wt % monetite containing gelatin scaffold exhibited better MG-63 cell adhesion, proliferation, higher biomineralization, and ALP activity compared to 0% and 5 wt% monetite containing electrospun scaffolds studied here.