Nanoparticles of calcium sulfate (nCS) have potential advantages as a ceramic matrix, scaffold and/or vehicle for delivering growth factors for osseous regeneration in a variety of clinical situations. The objectives of this study were to synthesize and characterize nanoparticles of hemihydrate calcium sulfate (nCS) and to develop a nCS-based system for bone regeneration. A cryo-vacuum method was used to process dihydrate CS into dihydrate nCS, which was then subjected to oven drying to produce hemihydrate. The nCS was sterilized by glow discharge treatment for use as a synthetic graft material for the treatment of bone defects. Electron microscopy showed that the nCS powder consisted of aggregates of closely arranged acicular crystals, approximately 30-80 nm in width, 400-600 nm in length and approximately 80-100 nm in diameter, providing a surface area about ten times that of conventional CS. Thorough physico-chemical characterization confirmed the composition and phase of the material. Cell viability/metabolic activity assays and alkaline phosphate assays confirmed the safety and biocompatibility of nCS. Release kinetics for adsorbed platelet-derived growth factor and bone morphogenetic protein-2 (BMP-2) suggests that nCS may serve as an appropriate vehicle for slow release delivery of these agents. The studies presented here give evidence of the advantages of nCS as a scaffold to support osteoblastic cell activity.