Utilizing biomimetic materials to potentiate endogenous cell growth or signaling is superior to relying on exogenous cells or signals for bone formation. Desferoxamine (DFO), which is a hypoxia-mimetic agent that chelates iron (Fe3+), mimics hypoxia to encourage bone healing. However, high cytotoxicity, off-target effects, and the short half-life of DFO have significantly impeded its further applications. We mitigated these side effects by locally immobilizing DFO onto a gelatin nanofibrous (GF) scaffold that retained DFO’s ability to chelate Fe3+. Moreover, DFO-functionalized GF (GF-DFO) scaffolds, which have similar micro/macrostructures to GF scaffolds, not only demonstrated decreased cytotoxicity on both human umbilical vein endothelial cells and human mesenchymal stem cells but also significantly increased vascular endothelial growth factor (VEGF) expression in vitro. Most importantly, in our in vivo experiments on a critical-sized cranial bone defect mouse model, a significant amount of bone was formed in most of the GF-DFO scaffolds after six weeks, while very little new bone was observed in the GF scaffolds. These data suggest that use of a hypoxia-mimicking nanofibrous scaffold is a promising strategy for promoting endogenous bone formation.