Adipose-derived mesenchymal stem cells (AD-MSCs) have been comprehensively reviewed for bone tissue engineering along with different biomaterials. However, the use of canine mesenchymal stem cells (cMSCs) embedded in platelet-rich plasma (PRP) gel can be a novel technique for critical-sized bone defect healing in the canine species. The present study evaluated the infrapatellar fat pad (IPFP) derived MSCs for growth kinetics, expression of CD73, CD90, and CD105 surface antigens, and bi-lineage differentiation along with gene expression studies. Moreover, cMSCs were entrapped in PRP gel (cMSCs-PRP gel) and implanted in 4mm induced radial bone defect. The IPFP-MSCs showed a significantly (P<0.007) higher proliferation rate on the 6^th and 9^th days than on the 3^rd day of culture. Furthermore, MSCs harvested from IPFP showed positive expression of CD73, CD90 and CD105 surface antigens. The significant (P=0.004) increase in the accumulation of intra-cytoplasmic fat droplets indicated that cMSCs successfully differentiated into adipocytes, while the extracellular deposition of hydroxyapatite minerals and significantly (P˂0.003) higher alkaline phosphatase (ALP) activity indicates the osteogenic lineage differentiation. Radiographic analysis after transplantation showed that the cMSCs-PRP-gel composite material can fill bone defects quickly compared with the PRP-gel alone. Moreover, the histological analysis of bone gap filled with MSCs-PRP-gel composite exhibited the presence of bony structure as well as osteoblasts and less fibrous tissue. In conclusion, our findings recommend that the cMSCs-PRP gel combination is a suitable choice for the healing of critical-sized bone defect.