In this work, novel modified nanoclays were used to mineralize hydroxyapatite (HAP) mimicking biomineralization in bone. This in situ HAPclay was further incorporated into chitosan/polygalacturonic acid (Chi/PgA) scaffolds and films for bone tissue engineering. Differences in microstructure of the scaffolds were observed depending on the changes in processing of in situ HAPclay with ChiPgA biopolymer system. Response of human mesenchymal stem cells (hMSCs) on these scaffolds and films was studied using imaging and assays. SEM micrographs indicate that hMSCs were able to adhere to ChiPgA/in situ HAPclay scaffolds and phase contrast images indicated formation of mineralized nodules on ChiPgA/in situ HAPclay films in absence of osteogenic supplements used for differentiation of hMSCs. The formation of mineralized nodules by hMSCs was confirmed by positive staining of the nodules by Alizarin Red S dye. Viability and differentiation assays showed that ChiPgA/in situ HAPclay scaffolds were favorable for viability and differentiation of hMSCs. Unique two-stage cell seeding experiments were performed as a strategy to enhance tissue formation by hMSCs on ChiPgA/in situ HAPclay composite films. This work showed that biomaterials based on ChiPgA/in situ HAPclay composites can be used for bone tissue engineering applications and in situ nanoclay-HAP system mediates osteoinductive and osteoconductive response from hMSCs. © 2013 Wiley Periodicals, Inc. J Biomed Mater Res Part A: 101A: 2644–2660, 2013.