Diabetes mellitus (DM) and aging are associated with bone fragility and increased fracture risk. Both (1–37) N‐ and (107–111) C‐terminal parathyroid hormone‐related protein (PTHrP) exhibit osteogenic properties. We here aimed to evaluate and compare the efficacy of either PTHrP (1–37) or PTHrP (107–111) loaded into gelatin–glutaraldehyde‐coated hydroxyapatite (HA–Gel) foams to improve bone repair of a transcortical tibial defect in aging rats with or without DM, induced by streptozotocin injection at birth. Diabetic old rats showed bone structural deterioration compared to their age‐matched controls. Histological and μ‐computerized tomography studies showed incomplete bone repair at 4 weeks after implantation of unloaded Ha–Gel foams in the transcortical tibial defects, mainly in old rats with DM. However, enhanced defect healing, as shown by an increase of bone volume/tissue volume and trabecular and cortical thickness and decreased trabecular separation, occurred in the presence of either PTHrP peptide in the implants in old rats with or without DM. This was accompanied by newly formed bone tissue around the osteointegrated HA‐Gel implant and increased gene expression of osteocalcin and vascular endothelial growth factor (bone formation and angiogenic markers, respectively), and decreased expression of Sost gene, a negative regulator of bone formation, in the healing bone area. Our findings suggest that local delivery of PTHrP (1–37) or PTHrP (107–111) from a degradable implant is an attractive strategy to improve bone regeneration in aged and diabetic subjects. © 2016 Wiley Periodicals, Inc. J Biomed Mater Res Part A: 104A: 2060–2070, 2016.