We describe a simple method for bone engineering using biodegradable scaffolds with mesenchymal stem cells derived from human induced-pluripotent stem cells (hiPS-MSCs). The hiPS-MSCs expressed mesenchymal markers (CD90, CD73, and CD105), possessed multipotency characterized by tri-lineages differentiation: osteogenic, adipogenic, and chondrogenic, and lost pluripotency - as seen with the loss of markers OCT3/4 and TRA-1-81 - and tumorigenicity. However, these iPS-MSCs are still positive for marker NANOG. We further explored the osteogenic potential of the hiPS-MSCs in synthetic polymer polycaprolactone (PCL) scaffolds or PCL scaffolds functionalized with natural polymer hyaluronan and ceramic TCP (PHT) both in vitro and in vivo. Our results showed that these iPS-MSCs are functionally compatible with the two 3D scaffolds tested and formed typically calcified structure in the scaffolds. Overall, our results suggest the iPS-MSCs derived by this simple method retain fully osteogenic function and provide a new solution towards personalized orthopedic therapy in the future.