This study aimed to develop a biocompatible electrospun nanofiber matrix as a scaffold to enhance the biomechanical performance of gelatin hydrogel. The findings suggest that incorporating a carbon nanofiber (CNF) matrix around a gelatin surface reinforced with polycaprolactone (PCL) nanofibers significantly improves the mechanical properties and cytocompatibility of the gelatin hydrogel. Modified samples with CNF coatings exhibited the most favourable attributes, as evidenced by SEM, FTIR, tensile strength, and rheological analyses. The cytocompatibility of various gelatin hydrogel sample groups was assessed in vitro, including cytotoxicity evaluations on human skin fibroblasts (HSFs) and cell proliferation capacity. The sample modified with PCL nanofibers demonstrated the highest percentage of cell viability. An in -vivo rabbit model was also utilised to evaluate the bone volume percentage and interface shear strength of the gelatin hydrogel samples. Results showed that the CNF-coated gelatin-reinforced PCL sample (G-10PNF@CNF) enhanced HSF cell proliferation and increased surface roughness. In vivo studies further revealed a significant improvement in interface shear strength for the G-10PNF@CNF sample compared to control gelatin-10PNF/bone samples, likely due to increased connective tissue growth around the composite implant (p <
0.05). Additionally, G-10PNF@CNF exhibited the highest levels of neobone formation and osteocyte presence within lacunae, indicating effective bone regeneration.