It is advantageous to incorporate controlled growth factor delivery into tissue engineering strategies. The objective of this study was to develop a three-dimensional (3D) porous tissue engineering scaffold with the capability of controlled releasing recombinant human bone morphogenetic protein-7 (rhBMP-7) for enhancement of bone regeneration. RhBMP-7 was first encapsulated into poly(lactic-co-glycolic acid) (PLGA) nanospheres (NS) with an average diameter of 300nm. Poly(l-lactic acid) (PLLA) scaffolds with interconnected macroporous and nano-fibrous architectures were prepared using a combined sugar sphere template leaching and phase separation technique. A post-seeding technique was then utilized to immobilize rhBMP-7 containing PLGA nanospheres onto prefabricated nano-fibrous PLLA scaffolds with well-maintained 3D structures. In vitro release kinetics indicated that nanosphere immobilized scaffold (NS-scaffold) could release rhBMP-7 in a temporally controlled manner, depending on the chemical and degradation properties of the NS which were immobilized onto the scaffold. In vivo, rhBMP-7 delivered from NS-scaffolds induced significant ectopic bone formation throughout the scaffold while passive adsorption of rhBMP-7 into the scaffold resulted in failure of bone induction due to either the loss of rhBMP-7 biological function or insufficient duration within the scaffold. We conclude that the interconnected macroporous architecture and the sustained, prolonged delivery of bioactive rhBMP-7 from NS immobilized nano-fibrous scaffolds actively induced new bone formation throughout the scaffold. The approach offers a new delivery method of BMPs and a novel scaffold design for bone regeneration.