The objectives of this study were to incorporate iron oxide nanoparticles (IONPs) into calcium phosphate cement (CPC) to enhance bone engineering, and to investigate the effects of IONPs as a liquid or powder on stem cells using IONP-CPC scaffold for the first time. IONP-CPCs were prepared by adding 1% IONPs as liquid or powder. Human dental pulp stem cells (hDPSCs) were seeded. Subcutaneous implantation in mice was investigated. IONP-CPCs had better cell spreading, and greater ALP activity and bone mineral synthesis, than CPC control. Subcutaneous implantation for 6 weeks showed good biocompatibility for all groups. In conclusion, incorporating IONPs in liquid or powder form both substantially enhanced hDPSCs on IONP-CPC scaffold and exhibited excellent biocompatibility. IONP incorporation as a liquid was better than IONP powder in promoting osteogenic differentiation of hDPSCs. Incorporating IONPs and chitosan lactate together in CPC enhanced osteogenesis of hDPSCs more than using either alone.