Purpose: Osteomyelitis, particularly chronic osteomyelitis, remains a major challenge for orthopedic surgeons. The traditional treatment for osteomyelitis, which involves antibiotics and debridement, does not provide a complete solution for infection and bone repair. Antibiotics such as vancomycin (VCM) are commonly used to treat osteomyelitis in clinical settings. VCM use is limited by a lack of effective delivery methods that provide sustained, high doses to entirely fill irregular bone tissue to treat infections. Methods: We engineered a chitosan (CS)-based thermosensitive hydrogel to produce a VCM-nanoparticle (NPs)/Gel local drug delivery system. The VCM-NPs were formed with quaternary ammonium chitosan and carboxylated chitosan nanoparticles (VCM-NPs) by positive and negative charge adsorption to enhance the encapsulation efficiency and drug loading of VCM, with the aim of simultaneously preventing infection and repairing broken bones. This hydrogel was evaluated in a rabbit osteomyelitis model. Results: The VCM-NPs had high encapsulation efficiency and drug loading, with values of 60.1±2.1% and 24.1±0.84%, respectively. When embedded in CS-Gel, the VCM-NPs maintained their particle size and morphology, and the injectability and thermosensitivity of the hydrogel, which were evaluated by injectability test and rheological measurement, were retained. The VCM-NPs/Gel exhibited sustained release of VCM over 26 days. In vitro tests revealed that the VCM-NPs/Gel promoted osteoblast proliferation and activity against Staphylococcus aureus. In vivo, VCM-NPs/Gel (with 10 mg vancomycin per rabbit) was used to treat rabbits with osteomyelitis. The VCM-NPs/Gel showed excellent anti-infection properties and accelerating bone repair under osteomyelitis conditions. Conclusion: The reported multifunctional NPs hydrogel system for local antibiotic delivery (VCM-NPs/Gel) showed bone regeneration promotion and anti-infection properties, demonstrating significant potential as a scaffold for effective treatment of osteomyelitis.