Regenerative medicine aspires to reduce reliance on or overcome limitations associated with donor tissue-mediated repair. Structural bone allografts are commonly used in orthopedic surgery, with a high percentage of graft failure due to poor tissue integration. This problem is aggravated among elderly, those suffering from metabolic conditions, or those undergoing cancer therapies that compromise graft healing. Toward this end, we developed a synthetic graft named FlexBone, in which nanocrystalline hydroxyapatite (50 wt%) was structurally integrated with crosslinked poly(hydroxyethyl methacrylate) hydrogel, which provides dimensional stability and elasticity. It recapitulates the essential role of nanocrystalline hydroxyapatite in defining the osteoconductivity and biochemical microenvironment of bone because of its affinity for biomolecules. Here, we demonstrate that FlexBone effectively absorbed endogenously secreted signaling molecules associated with the inflammation/graft healing cascade upon being press-fit into a 5-mm rat femoral segmental defect. Further, when preabsorbed with a single dose of 400 ng recombinant human (rh) bone morphogenetic protein-2/7 heterodimer, it enabled the functional repair of the critical-sized defect by 8-12 weeks. FlexBone was stably encapsulated by the bridging bony callus and the FlexBone-callus interface was continuously remodeled. In summary, FlexBone combines the dimensional stability and osteoconductivity of structural bone allografts with desirable surgical compressibility and acquired osteoinductivity in an easy-to-fabricate and scalable synthetic biomaterial.