Tissue engineering strategies involving the in vivo delivery of recombinant growth factors are often limited by the inability of biomaterials to spatially control diffusion of the delivered protein within the site of interest. The poor spatiotemporal control provided by porous collagen sponges, which are used for the clinical delivery of bone morphogenetic protein-2 (BMP-2) for bone regeneration, has necessitated the use of supraphysiological protein doses, leading to inflammation and heterotopic ossification. This study describes a novel tissue engineering strategy to spatially control rapid BMP-2 diffusion from collagen sponges in vivo by creating a high-affinity BMP-2 sink around the collagen sponge. We designed an electrospun poly-ɛ-caprolactone nanofiber mesh containing physically entrapped heparin microparticles, which have been previously demonstrated to bind and retain large amounts of BMP-2. Nanofiber meshes containing 0.05 and 0.10 mg of microparticles/cm demonstrated increased BMP-2 binding and decreased BMP-2 release in vitro compared with meshes without microparticles. However, when microparticle-containing meshes were used in vivo to limit the diffusion of BMP-2 delivered by using collagen sponges in a rat femoral defect, no differences in heterotopic ossification or biomechanical properties were observed. Further investigation revealed that, although BMP-2 binding to heparin microparticles was rapid, the presence of serum components attenuated microparticle-BMP-2 binding and increased BMP-2 release in vitro. These observations provide a plausible explanation for the results observed in vivo and suggest that competitive protein binding in vivo may hinder the ability of affinity-based biomaterials to modulate growth factor delivery.