Interest in the development of new sources of transplantable materials for the treatment of injury or disease has led to the convergence of tissue engineering with stem cell technology. Bone and joint disorders are expected to benefit from this new technology because of the low self-regenerating capacity of bone matrix secreting cells. Herein, the differentiation of stem cells to bone cells using active multilayered capsules is presented. The capsules are composed of poly-L-glutamic acid and poly-L-lysine with active growth factors embedded into the multilayered film. The bone induction from these active capsules incubated with embryonic stem cells was demonstrated in vitro. Herein, we report the unique demonstration of a multilayered capsule-based delivery system for inducing bone formation in vivo. This strategy is an alternative approach for in vivo bone formation. Strategies using simple chemistry to control complex biological processes would be particularly powerful, as they make production of therapeutic materials simpler and more easily controlled.