Difficulties in treating pseudarthrosis and critical bone defects are still evident in physicians’ clinical routines. Bone morphogenetic protein 2 (BMP-2) has shown promising osteoinductive results but also considerable side effects, not unexpected given that it is a morphogen. Thus, the bone regenerative potential of the novel selective, non-morphogenic EP4 prostaglandin receptor agonist KMN-159 was investigated in this study. Therefore, mineralized collagen type-1 matrices were loaded with different amounts of BMP-2 or KMN-159 and implanted into a 5 mm critical-sized femoral defect in rats. After 12 weeks of observation, micro-computed tomography scans were performed to analyze the newly formed bone volume (BV) and bone mineral density (BMD). Histological analysis was performed to evaluate the degree of defect healing and the number of vessels, osteoclasts, and osteoblasts. Data were evaluated using Kruskal-Wallis followed by Dunn’s post hoc test. As expected, animals treated with BMP-2, the positive control for this model, showed a high amount of newly formed BV as well as bone healing. For KMN-159, a dose-dependent effect on bone regeneration could be observed up to a dose optimum, demonstrating that this non-morphogenic mechanism of action can stimulate bone formation in this model system.