Gadolinium (Gd) is one of trace rare earth elements (REEs) existing in human bones; however, the underlying mechanisms of Gd element on positive cell response and bone regeneration have rarely been reported. Herein, we firstly constructed GdPO4/chitosan (CTS) scaffolds by lyophilisation method. The appropriate macropores and biocompatible chemical components improved the osteoconductivity of the GdPO4/CTS scaffolds, resulting in admired cell spreading and in vivo bone tissue in-growth. The concentrations of the as-released Gd3+ ions were kept in safety ranges, and had non-toxicity to rat bone marrow mesenchymal stem cells (rBMSCs). Notably, the GdPO4 nanoparticles in the GdPO4/CTS scaffolds significantly promoted the osteogenic differentiation of rBMSCs via activated Smad/Runx2 signaling pathway. As compared with beta-TCP/CTS scaffolds, the GdPO4/CTS scaffolds remarkably up-regulated the levels of ALP, Runx-2, OCN and Col-I expression. Moreover, rat critical calvarial defect models revealed that the newly formed bone tissues were much greater in the GdPO4/CTS group than in the beta-TCP/CTS group. The exciting finding revealed the underlying mechanism of GdPO4 nanoparticles on enhanced osteogenic activity, and provided a promising GdPO4-based scaffold for bone regeneration.