The biocompatibility of biomaterials is essentially for its application. The aim of current study was to evaluate the biocompatibility of poly(lactic-co-glycolic acid) (PLGA)/gelatin/nanohydroxyapatite (n-HA) (PGH) nanofibers systemically to provide further rationales for the application of the composite electrospun fibers as a favorable platform for bone tissue engineering. The PGH composite scaffold with diameter ranging from nano- to micrometers was fabricated by using electrospinning technique. Subsequently, we utilized confocal laser scanning microscopy (CLSM) and MTT assay to evaluate its cyto-compatibility in vitro. Besides, real-time quantitative polymerase chain reaction (qPCR) analysis and alizarin red staining (ARS) were performed to assess the osteoinductive activity. To further test in vivo, we implanted either PLGA or PGH composite scaffold in a rat subcutaneous model. The results demonstrated that PGH scaffold could better support osteoblasts adhesion, spreading, and proliferation and show better cyto-compatibility than pure PLGA scaffold. Besides, qPCR analysis and ARS showed that PGH composite scaffold exhibited higher osteoinductive activity owing to higher phenotypic expression of typical osteogenic genes and calcium deposition. The histology evaluation indicated that the incorporation of Gelatin/nanohydroxyapatite (GH) biomimetics could significantly reduce local inflammation. Our data indicated that PGH composite electrospun nanofibers possessed excellent cyto-compatibility, good osteogenic activity, as well as good performance of host tissue response, which could be versatile biocompatible scaffolds for bone tissue engineering.