This study developed a drug-loadable hydrogel system with high plasticity and favorable biological properties to enhance oral bone tissue regeneration. Hydrogels of different calcium alginate concentrations were prepared. Their swelling ratio, degradation time, and bovine serum albumin (BSA) release rate were measured. Human periodontal ligament cells (hPDLCs) and bone marrow stromal cells (BMSCs) were cultured with both calcium alginate hydrogels and polylactic acid (PLA), and then we examined the proliferation of cells. Inflammatory-related factor gene expressions of hPDLCs and osteogenesis-related gene expressions of BMSCs were observed. Materials were implanted into the subcutaneous tissue of rabbits to determine the biosecurity properties of the materials. The materials were also implanted in mandibular bone defects and then scanned using micro-CT. The calcium alginate hydrogels caused less inflammation than the PLA. The number of mineralized nodules and the expression of osteoblast-related genes were significantly higher in the hydrogel group compared with the control group. When the materials were implanted in subcutaneous tissue, materials showed favorable biocompatibility. The calcium alginate hydrogels had superior osteoinductive bone ability to the PLA. The drug-loadable calcium alginate hydrogel system is a potential bone defect reparation material for clinical dental application.