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Growth factors (GFs) are major biochemical cues for tissue regeneration. Herein, a novel dual GF delivery system is designed composed of poly(lactic-co-glycolic acid) (PLGA) nanoparticles (NPs) and alginate microcapsules (MCs) via an electrodropping method. While bone morphogenetic protein (BMP)-2 is encapsulated in the PLGA NPs, vascular endothelial growth factor (VEGF) is included in the alginate MCs, where BMP-2-loaded PLGA NPs are entrapped together in the fabrication process. The initial loading efficiencies of BMP-2 and VEGF are 78% ± 3.6% and 43% ± 1.7%, respectively. When our dual GF-loaded MCs are assessed for in vitro osteogenesis of umbilical cord blood-derived mesenchymal stem cells (UCB-MSCs) on 2D and 3D environment, MCs contribute to much better UCB-MSCs osteogenesis as confirmed by von Kossa staining, immunofluorescence (osteocalcin, collagen 1), calcium content measurement, and osteogenic markers expression. In addition, when dual GF-encapsulated MCs are combined with collagen and then applied to 8 mm diameter rat calvarial defect model, the positive effects on vascularized bone regeneration are much more pronounced; micro computed tomography (CT) and histology analyses exhibit 82.3% bone healing coupled with 12.6% vessel occupied area. Put together, current study indicates a synergistic effect of BMP-2/VEGF and highlights the great potential of dual GF delivery modality (PLGA NPs-in-MC) for regeneration of vascularized bone.