A composite of recombinant human bone morphogenetic protein-2 (rhBMP-2) and collagen was implanted beneath the cranial periosteum of 10-month-old rats to observe bone development and absorbent change of carrier collagen. The rhBMP-2/collagen onlay implant resulted in active bone formation and the augmented bone was connected directly with the original bone, whereas the collagen alone resulted in neither bone nor cartilage. The ossification process in the rhBMP-2/collagen occurred directly through bone formation, similar to intramembranous ossification. The carrier collagen fibers were found in the woven bone and were completely absorbed at 8 weeks in the presence of rhBMP-2, while the collagen alone implant remained encapsulated by a thin, fibrous connective tissue. Our results indicate that rhBMP-2/collagen is an effective material as a biological onlay implant, showing osteoinductive properties and being completely replaced by new bone. Carrier collagen not only plays a role in rhBMP-2 delivery, but also provides a cell anchorage for cell differentiation and remains as an artificial matrix in woven bone.