The objective of this study was to create a novel approach to promote bone induction through sustained release of growth factor from a 3-dimensional (3D) hybrid scaffold. Peptide-amphiphile (PA) was synthesized by standard solid-phase chemistry that ends with the alkylation of the NH2 terminus of the peptide. Collagen sponge was reinforced by incorporation of poly(glycolic acid) (PGA) fiber. A 3D network of nanofibers was formed by mixing basic fibroblast growth factor (bFGF) suspensions with dilute aqueous solutions of PA. A hybrid scaffold was fabricated by combination of self-assembled PA nanofibers and collagen sponge reinforced with incorporation of PGA fibers. The in vitro release profile of bFGF from hybrid scaffold was investigated, and ectopic bone formation induced by the released bFGF was assessed after subcutaneous implantation of hybrid scaffold into the backs of rats. Homogeneous bone formation was histologically observed throughout the hybrid scaffolds, in marked contrast to collagen sponge-incorporated bFGF. The level of alkaline phosphatase activity and osteocalcin content at the implanted sites of hybrid scaffolds were significantly high compared with collagen sponge incorporated with bFGF. The combination of bFGF incorporated in a collagen sponge self-assembled PA nanofiber hybrid scaffold is a promising procedure to improve bone regeneration. © Mary Ann Liebert, Inc.