Calcium phosphate cement (CPC) is a highly promising bone substitute and an excellent carrier for delivering growth factors. Yet, the lack of macro-porosity and osteoinductive ability, limit its use. This study is aimed at developing a novel biodegradable biomaterial for bone repair with both highly osteoconductive and osteoinductive properties. RhBMP-2 loaded PLGA microspheres were incorporated into rhBMP-2/CPC for macropores for bone ingrowth. The compressive strength, crystallinity, microscopic structure, and bioactivity of the composites were investigated. The results showed that with the incorporation of rhBMP-2 loaded PLGA microspheres, the compressive strength was decreased from (29.48+/-6.42) MPa to (8.26+/-3.58) MPa. X-ray diffraction revealed that the crystallinity pattern of HA formed by CPC had no significant change. Inside the composite, the microspheres distributed homogeneously and contacted intimately with the HA matrix, as observed by scanning electron microscopy (SEM). When the PLGA microspheres dissolved after having been emerged in PBS for 56 days, macropores were created within the CPC. The rhBMP-2/PLGA/CPC composite, showing a 4.9% initial release of rhBMP-2 in 24 h, followed by a prolonged release for 28 days, should have a greater amount of rhBMP-2 released compared to the CPC delivery system. When rabbit marrow stromal cells were cocultured with the composite, the alkaline phosphatase (ALP) and osteocalcin (OC) showed a dose response to the rhBMP-2 released from the composite, indicating that the activity of rhBMP-2 was retained. This study shows that the new composite reveals more rhBMP-2 release and osteogenic activity. This novel BMP/PLGA/CPC composite could be a promising synthetic bone graft in craniofacial and orthopedic repairs.