OBJECTIVE To study the efficacy of combined use of rhBMP2/BCBand free periosteal graft in repairing segmental bony defects. METHODS A new grafting material (rhBMP2/BCB) was made by combining recombinant human BMP2 (rhBMP2) and an antigen-free bovine cancellous bone (BCB) as a carrier. rhBMP2/BCB was used alone in conjunction with free periosteal graft to repair a 1.5 cm defect in the radius of the rabbit. The defect-repairing capability for each of the treatment modalities was assessed radiographically, biomechanically, and by densitometry and histological studies. RESULTS rhBMP2/BCB used alone was capable of healing the defect in large by 16 weeks, with a similar repair process and mechanism seen with RBX. Combined use of rhBMP2/BCB and free periosteal graft was superior in terms of increased amount and quality of the new bone formed at the early stage of the repair process (within 12 weeks) to rhBMP2/BCB used in isolation, with the defect basically healed by 12 weeks. CONCLUSIONS Both methods are effective in repairing segmental bony defects, with rhBMP2/BCB used in conjunction with free periosteal graft being most preferred, considering the satisfactory osteogenesis, osteoconduction and osteoinduction.