Tissue engineering and regenerative medicine has gradually evolved as a promising therapeutic strategy to the modern healthcare of the aging and diseased population. In this study, we developed a novel nano-fibrous scaffold and verified its application in the critical bone defect regeneration. The metformin-incorporated nano-gelatin/hydroxyapatite fibers (NGF) was produced by electrospinning, cross-linked, and then characterized by XRD and FTIR. Cytotoxicity, cells adhesion, cell differentiation, and quantitative osteogenic gene and protein expression were analyzed by bone marrow stem cells from rat. Rat forearm critical bone defect model was performed for the in vivo study. The nano-gelatin/hydroxyapatite fibers (NGF) were characterized by their porous structures with proper interconnectivity without significant cytotoxic effects; the adhesion of bone marrow stem cells on the nano-gelatin/hydroxyapatite fibers (NGF) could be enhanced. The osteogenic gene and protein expression were upregulated. Post implantation, the new regenerated bone in bone defect was well demonstrated in the NGF samples. We demonstrated that the metformin-incorporated nano-gelatin-hydroxyapatite fibers greatly improved healing potential on the critical sized bone defect. Although metformin-incorporated nano-gelatin/hydroxyapatite fibers had advantageous effectiveness during bone regeneration, further validation is required before it can be applied to clinical applications.