Although many strategies have been utilized to accelerate bone regeneration, an appropriate treatment strategy to regenerate a new bone with optimum morphology and mechanical properties has not been invented as yet. This study investigated the healing potential of a composite scaffold consisting of chitosan (CS), gelatin (Gel) and platelet gel (PG), named CS-Gel-PG, on a bilateral critical sized radial bone defect in rat. Eighty radial bone defects were bilaterally created in 40 Sprague-Dawley rats and were randomly divided into eight groups including untreated, autograft, CS, Gel, CS-PG, Gel-PG, CS-Gel, and CS-Gel-PG treated defects. The bone defects were evaluated clinically and radiologically during the study and their bone samples were assessed by gross and histopathology, histomorphometry, CT-scan, scanning electron microscopy, and biomechanical testing after 8 weeks of bone injury. The autograft and CS-Gel-PG groups showed significantly higher new bone formation, density of osseous and cartilaginous tissues, bone volume, and mechanical performance than the defect, CS and Gel-PG groups (P< 0.05). In addition, bone volume, density of osseous and cartilaginous tissues, and numbers of osteons in the CS-Gel-PG group were significantly superior to the CS-PG, CS-Gel and Gel groups (P< 0.05). Increased mRNA levels of alkaline phosphatase, runt-related transcription factor 2, osteocalcin, collagen type 1 and CD31, vascular endothelial growth factor as osteogenic and angiogenic differentiation markers were found with the CS-Gel-PG scaffold by quantitative real-time PCR in vitro after 30 days of culturing on bone marrow-derived mesenchymal stem cells. In conclusion, the healing potential of CS-Gel scaffold embedded with PG was comparable to autografting and therefore, it can be offered as an appropriate scaffold in bone tissue engineering and regenerative applications.