Reconstruction of critical sized bone injuries is a major problem that continues to inspire the design of new materials and grafts. Natural ceramics (hydroxyapatite (HA) coralline HA, or synthetic HA) and β-tricalcium phosphate (β-TCP) are being explored for use as scaffolds in bone tissue engineering, among several other materials. The present study evaluated the bone forming capacity of nanosize bioceramics synthesized in situ in poly-vinyl alcohol (PVA) with different ratios of HA and β-TCP; the Ca/P ratio was 1.62 for bioceramic P1, 1.60 for P2 and 1.58 for P3. Further osteogenesis in vitro with mesenchymal stem cells (MSC) acquired from different sources for osteogenesis in vitro and their bone healing properties in vivo were also evaluated. MSC isolated from human placenta, Wharton's jelly from umbilical cord, fetal bone marrow and adipose tissue, cultured in the presence of nanosize bioceramic particles, were monitored for osteogenic differentiation. Placental cells showed the best osteogenic potential of the different MSC studied on the basis of expression of osteogenic markers. Complete regeneration of the damaged region was observed in vivo when MSC derived from placenta were used with nanoceramic (Ca/P ratio 1.58) in the experimental defect created in the femur of Wistar rats. Even small variation in the Ca/P ratio can alter the outcome of tissue constructs.