A computer-controlled perfusion bioreactor was developed for the streamlined production of engineered osteogenic grafts. This system automated the required bioprocesses, from the initial filling of the system through the phases of cell seeding and prolonged cell/tissue culture. Flow through chemo-optic micro-sensors allowed to non-invasively monitor the levels of oxygen and pH in the perfused culture medium throughout the culture period. To validate its performance, freshly isolated ovine bone marrow stromal cells were directly seeded on porous scaffold granules (hydroxyapatite/β-tricalcium-phosphate/poly-lactic acid), bypassing the phase of monolayer cell expansion in flasks. Either 10 or 20 days after culture, engineered cell-granule grafts were implanted in an ectopic mouse model to quantify new bone formation. After four weeks of implantation, histomorphometry showed more bone in bioreactor-generated grafts than cell-free granule controls, while bone formation did not show significant differences between 10 days and 20 days of incubation. The implanted granules without cells had no bone formation. This novel perfusion bioreactor has revealed the capability of activation larger viable bone graft material, even after shorter incubation time of graft material. This study has demonstrated the feasibility of engineering osteogenic grafts in an automated bioreactor system, laying the foundation for a safe, regulatory-compliant, and cost-effective manufacturing process.