Organic-inorganic hybrids consisting of organic biopolymers and the essential constituents of bioactive ceramics (i.e., Si-OH groups and Ca2+ ions) are useful as novel bone substitutes, because of their bioactivity and mechanical properties analogous to those of natural bone. In the present study, organic-inorganic nanocomposite scaffolds were prepared using chitosan-modified montmorillonite incorporated in poly(ε-caprolactone) by solvent casting and particulate leaching method. The obtained nanohybrid scaffolds were characterized by scanning electron microscopy with energy dispersive x-ray spectroscopy, x-ray diffraction and dynamic mechanical analysis. The bioactivity of the synthesized hybrids was assessed in vitro by culturing osteoblast cells on the biomaterials. These studies revealed an improvement in the viability, proliferation and differentiation of the cells on the hybrid scaffolds. The composition, porous nature and rough surfaces of these materials seemed to improve cell attachment and infiltration within the scaffolds. Osteoconductive differentiation of the cells was observed through alkaline phosphatase activity on the cell-scaffold constructs. These scaffolds have a potential application in bone fracture repair.