The focus of the current study was to develop a functional and bioactive scaffold through the combination of 3D polylactic acid (PLA)/polycaprolactone (PCL) with gelatin nanofibers (GNFs) and Taurine (Tau) for bone defect regeneration. GNFs were fabricated via electrospinning dispersed in PLA/PCL polymer solution, Tau with different concentrations was added, and the polymer solution converted into a 3D and porous scaffold via the thermally-induced phase separation technique. The characterization results showed that the scaffolds have interconnected pores with the porosity of up to 90%. Moreover, Tau increased the wettability and weight loss rate, while compromised the compressive strengths. The scaffolds were hemo- and cytocompatible and supported cell viability and proliferation. The in vivo studies showed that the defects treated with scaffolds filled with new bone. The computed tomography (CT) imaging and histopathological observation revealed that the PLA/PCL/Gel/Tau 10% provided the highest new bone formation, angiogenesis, and woven bone among the treatment groups. Our finding illustrated that the fabricated scaffold was able to regenerate bone within the defect and can be considered as the effective scaffold for bone tissue engineering application.