The objective of the present study was to enhance ectopic bone formation through the controlled release of bone morphogenetic protein-2 (BMP-2) from an injectable three dimensional (3-D) tissue engineered nano-scaffold. We demonstrate that a 3-D scaffold can be formed by mixing of peptide-amphiphile (PA) aqueous solution with BMP-2 suspension. A 3-D network of nanofibers was formed by mixing BMP-2 suspensions with dilute aqueous solutions of PA. Scanning electron microscopy (SEM) observation revealed the formation of fibrous assemblies with an extremely high aspect ratio and high surface areas. In vivo release profile of BMP-2 from 3-D network of nanofibers was investigated. In addition, ectopic bone formation induced by the released BMP-2 was assessed in a rat model using histological and biochemical examinations. It was demonstrated that the injection of an aqueous solution of PA together with BMP-2 into the back subcutis of rats, resulted in the formation of a transparent 3-D hydrogel at the injected site and induced significant homogeneous ectopic bone formation around the injected site, in marked contrast to BMP-2 injection alone or PA injection alone. The combination of BMP-2-induced bone formation is a promising procedure to improve tissue regeneration.