Gene-activated scaffolds have been shown to induce controlled, sustained release of functional transgene both in vitro and in vivo. Bone morphogenetic proteins (BMPs) are potent mediators of osteogenesis however we found that the delivery of plasmid BMP-2 (pBMP-2) alone was not sufficient to enhance bone formation. Therefore, the aim of this study was to assess if the use of a series of modified BMP-2 plasmids could enhance the functionality of a pBMP-2 gene-activated scaffold and ultimately improve bone regeneration when implanted into a critical sized bone defect in vivo. A multi-cistronic plasmid encoding both BMP-2 and BMP-7 (BMP-2/7) was employed as was a BMP-2-Advanced plasmid containing a highly truncated intron sequence. With both plasmids, the highly efficient cytomegalovirus (CMV) promoter sequence was used. However, as there have been reports that the elongated factor 1-α promoter is more efficient, particularly in stem cells, a BMP-2-Advanced plasmid containing the EF1α promoter was also tested. Chitosan nanoparticles (CS) were used to deliver each plasmid to MSCs and induced transient up-regulation of BMP-2 protein expression, in turn significantly enhancing MSC-mediated osteogenesis when compared to untreated controls (p < 0.001). When incorporated into a bone mimicking collagen-hydroxyapatite scaffold, the BMP-2-Advanced plasmid, under the control of the CMV promotor, induced MSCs to produce approximately 2500 μg of calcium per scaffold, significantly higher (p < 0.001) than all other groups. Just 4 weeks post-implantation in vivo, this cell-free gene-activated scaffold induced significantly more bone tissue formation compared to a pBMP-2 gene-activated scaffold (p < 0.001) as indicated by microCT and histomorphometry. Immunohistochemistry revealed that the BMP-2-Advanced plasmid accelerated differentiation of osteoprogenitor cells to mature osteoblasts, thus causing rapid healing of the bone defects. This study confirms that optimising the plasmid construct can enhance the functionality of gene-activated scaffolds and translate to accelerated bone formation in a critical sized defect.