Numerous materials have been proposed for bone tissue regeneration. However, none has been shown to be entirely satisfactory. In this study we fabricated a hybrid composite scaffold composed of poly(D,L-lactide-co-glycolide) (PLGA) and a naturally derived collagen matrix derived from porcine bladder submucosa matrix (BSM), and evaluated the biological activities and physical properties of the scaffold for use in bone tissue regeneration. The BSM-PLGA composite scaffolds are able to promote cellular interactions and possess uniformly interconnected pores with adequate structural integrity. The composite scaffolds were tested with both human embryonic stem (hES) cells and bovine osteoblasts (bOB). Cells seeded on the composite scaffolds readily attached, infiltrated and proliferated, as confirmed by cell viability and mitochondrial metabolic activity. Use of the composite scaffolding system with cells may enhance the formation of bone tissue for therapeutic regeneration.