Nanodiamonds (NDs) have attracted considerable attention as drug delivery nanocarriers due to their low cytotoxicity and facile surface functionalization. Given these features, NDs have been recently investigated for the fabrication of nanocomposite hydrogels for tissue engineering. Here we report the synthesis of a hydrogel using photocrosslinkable gelatin methacrylamide (GelMA) and NDs as a three-dimensional scaffold for drug delivery and stem cell-guided bone regeneration. We investigated the effect of different concentration of NDs on the physical and mechanical properties of the GelMA hydrogel network. The inclusion of NDs increased the network stiffness, which in turn augmented the traction forces generated by human adipose stem cells (hASCs). We also tested the ability of NDs to adsorb and modulate the release of a model drug dexamethasone (Dex) to promote the osteogenic differentiation of hASCs. The ND-Dex complexes modulated gene expression, cell area, and focal adhesion number in hASCs. Moreover, the integration of the ND-Dex complex within GelMA hydrogels allowed a higher retention of Dex over time, resulting in significantly increased alkaline phosphatase activity and calcium deposition of encapsulated hASCs. These results suggest that conventional GelMA hydrogels can be coupled with conjugated NDs to develop a novel platform for bone tissue engineering.