Many craniofacial birth defects contain skeletal components requiring bone grafting. We previously identified the novel secreted osteogenic molecule NELL-1, first noted to be overexpressed during premature bone formation in calvarial sutures of craniosynostosis patients. Nell-1 overexpression significantly increases differentiation and mineralization selectively in osteoblasts, while newborn Nell-1 transgenic mice significantly increase premature bone formation in calvarial sutures. In the current study, cultured calvarial explants isolated from Nell-1 transgenic newborn mice (with mild sagittal synostosis) demonstrated continuous bone growth and overlapping sagittal sutures. Further investigation into gene expression cascades revealed that fibroblast growth factor-2 and transforming growth factor-beta1 stimulated Nell-1 expression, whereas bone morphogenetic protein (BMP)-2 had no direct effect. Additionally, Nell-1-induced osteogenesis in MC3T3-E1 osteoblasts through reduction in the expression of early up-regulated osteogenic regulators (OSX and ALP) but induction of later markers (OPN and OCN). Grafting Nell-1 protein-coated PLGA scaffolds into rat calvarial defects revealed the osteogenic potential of Nell-1 to induce bone regeneration equivalent to BMP-2, whereas immunohistochemistry indicated that Nell-1 reduced osterix-producing cells and increased bone sialoprotein, osteocalcin, and BMP-7 expression. Insights into Nell-1-regulated osteogenesis coupled with its ability to stimulate bone regeneration revealed a potential therapeutic role and an alternative to the currently accepted techniques for bone regeneration.