Bone morphogenetic protein-2 (BMP-2) delivered in a suitable implantable matrix has the potential to repair local skeletal defects by inducing new bone formation from undifferentiated pluripotent stem cells resident in host tissue. In this study, we examined in vitro the potential of a derivatized hyaluronic acid (Hyaff-11) scaffold as a delivery vehicle for recombinant human BMP-2 (rhBMP-2) in bone and cartilage repair therapies. Hyaff-11 scaffolds were fabricated using a phase inversion/particulate leaching method and soak-loaded with rhBMP-2. In vitro release kinetics of rhBMP-2, demonstrated using enzyme-linked immunosorbant assay and alkaline phosphatase (ALP) assay revealed a slow, sustained rhBMP-2 release during 28 days, with a cumulative release of 31.82% of the initial rhBMP-2 loaded. rhBMP-2 was released in bioactive form as demonstrated by ALP induction of pluripotent cell line, C3H10T1/2 (T1/2), down the osteoblast lineage when incubated with the release supernatants. rhBMP-2 retention in Hyaff-11 scaffolds was greater than that from collagen gels, which released most of the initially loaded rhBMP-2 by 14 days. rhBMP-2-loaded Hyaff-11 scaffolds were also seeded with T1/2 cells and evaluated at 3, 7, 14, and 28 days for viability and expression of osteoblast phenotype. Cells remained viable throughout the study and expressed a time- and dose-dependent ALP and osteocalcin expression in the rhBMP-2 groups. Based on these observations, Hyaff-11 scaffolds may be suitable delivery systems for rhBMP-2 in bone/cartilage repair because of their ability to retain rhBMP-2, release low levels of bioactive rhBMP-2 to the local environment in a sustained manner, and stimulate differentiation of pluripotent stem cells.