Background: Icariin (ICA), a main active ingredient of Herba Epimedium, could promote bone formation, inhibit bone resorption and alleviate inflammatory responses. The aim of this study was to investigate the effect of ICA on the inhibition of bacteria associated with peri-implantitis, and fabricate a calcium phosphate cement with ICA-loaded gelatin microspheres as a local drug delivery system efficiently promoting bone formation and alleviating inflammation. Results: The encapsulation efficiency of gelatin microspheres reached the maximum value of 76.26 ± 3.97%, when the concentration of ICA was 0.5 mM. Gelatin microspheres with ICA revealed a controlled release profile, gelatin microspheres with 0.5 mM ICA exhibited a higher ICA release profile than the other groups during a 21 d monitoring span. The results of SEM, XRD and FTIR demonstrated successful fabrication of the ICA-loaded calcium phosphate cement. In addition, the ICA-loaded composite cement promoted the proliferation of BMSCs and significantly stimulated the differentiation and maturation of BMSCs. In vivo, H&E and Masson staining experiments demonstrated that the CPC/GMs(ICA) material exhibited better capacity for bone regeneration than CPC/GMs and CPC, and the expression of TNF-α and IL-1β in the tissue around CPC/GMs(ICA) material was significantly lower than CPC/GMs and CPC in IHC staining (P < 0.05).Conclusion: In this study, ICA exhibited limited antibacterial activity against bacteria associated with peri-implantitis. A composite material of calcium phosphate cement with ICA-loaded gelatin microspheres was developed, which not only promoting osteoinductivity and bone formation, but also alleviating inflammation, demonstrating its potential as a promising bone substitute material for treatment of peri-implantitis.