Temperature‐sensitive polymers were prepared for in vivo delivery of recombinant human Bone Morphogenetic Protein‐2 (rhBMP‐2). The polymers were designed to overcome a critical limitation of current rhBMP‐2 delivery systems, namely to provide a mechanism for in situ retention of the protein. The polymers were based on N‐isopropylacrylamide (NiPAM). Ethyl methacrylate (EMA) and N‐acryloxysuccinimide (NASI) were incorporated into the NiPAM polymer to reduce the lower critical solution temperature and to conjugate to proteins, respectively. To test capacity of polymers to retain rhBMP‐2, rhBMP‐2 were labeled with 125I, formulated with the polymers and were either implanted with a collagen sponge or injected directly into an intramuscular site in rats. The results indicated that implantation with a relatively low polymer concentration (3.9 mg/mL) did not result in significant rhBMP‐2 retention, but increasing the polymer concentration (28.7 mg/mL) gave a better retention with NiPAM/NASI polymers. In the injectable mode, NiPAM/NASI and NiPAM/EMA gave ∼ 200‐fold better retention after 9 days in vivo. We conclude that synthetic, temperature‐sensitive polymers can be engineered to sequester and retain osteoinductive proteins at a site of administration. Devices with an enhanced osteopotency should result by delivering rhBMP‐2 with the prepared biomaterials.