Bone morphogenetic proteins (BMPs, e.g., BMP2 and 7) are potent mediators for bone repair, however, their clinical use has been limited by their safety and cost-effectiveness. Therefore, innovative strategies that can improve the efficacy of BMPs, and thereby, use a lower dose of exogenous BMPs are highly desired. Inspired by the natural interaction between extracellular matrix (ECM) and growth factors, we hypothesize that bone matrix-mimicking nanofibrous scaffold functionalized with BMP binding moieties can selectively capture and stabilize BMPs, and thereby, promote BMP-induced osteogenic differentiation. To test our hypothesis, a gelatin nanofibrous scaffold was fabricated using thermally induced phase separation together with a porogen leaching technique (TIPS&P) and functionalized by a BMP-binding peptide (BBP) through cross-linking. Our data indicated that BBP decoration largely improved the BMP2 binding and retention capacity of the nanofibrous scaffolds without compromising their macro/microstructure and mechanical properties. Importantly, the BBP-functionalized gelatin scaffolds were able to significantly promote BMP2-induced osteogenic differentiation. Moreover, BBP alone was able to significantly stimulate endogenous BMP2 expression and improve osteogenic differentiation. Compared to other affinity-based drug delivery strategies, e.g., heparin and antibody-mediated growth factor delivering techniques, we expect BBP-functionalized scaffolds will be a safer, more feasible and selective strategy for endogenous BMP stimulating and binding. Therefore, our data suggests a promising application of using the BBP-decorated gelatin nanofibrous scaffold to stimulate/capture BMPs and promote endogenous bone formation in situ in contrast to relying on the administration of high doses of exogenous BMPs and transplantation of cells.