Due to availability and ease of harvest, adipose tissue is a favorable source of progenitor cells in regenerative medicine, but has yet to be optimized for osteogenic differentiation. The purpose of this study was to test cranial bone healing in a surgical defect model utilizing bone morphogenetic protein-9 (BMP-9) transduced immortalized murine adipocyte (iMAD) progenitor cells in a citrate-based, phase-changing, poly(polyethylene glycol citrate-co-N-isopropylacrylamide) (PPCN)-gelatin scaffold. Mesenchymal progenitor iMAD cells were transduced with adenovirus expressing either BMP-9 or green fluorescent protein control. Twelve mice underwent craniectomy to achieve a critical-sized cranial defect. The iMAD cells were mixed with the PPCN-gelatin scaffold and injected into the defects. MicroCT imaging was performed in 2-week intervals for 12 weeks to track defect healing. Histologic analysis was performed on skull sections harvested after the final imaging at 12 weeks to assess quality and maturity of newly formed bone. Both the BMP-9 group and control group had similar initial defect sizes (P = 0.21). At each time point, the BMP-9 group demonstrated smaller defect size, higher percentage defect healed, and larger percentage defect change over time. At the end of the 12-week period, the BMP-9 group demonstrated mean defect closure of 27.39%, while the control group showed only a 9.89% defect closure (P < 0.05). The BMP-9-transduced iMADs combined with a PPCN-gelatin scaffold promote in vivo osteogenesis and exhibited significantly greater osteogenesis compared to control. Adipose-derived iMADs are a promising source of mesenchymal stem cells for further studies in regenerative medicine, specifically bone engineering with the aim of potential craniofacial applications.