The reconstruction of segmental bone defects remains an urgent problem in the orthopaedic field, and bone morphogenetic protein-2 (BMP-2) is known for its potent osteoinductive properties in bone regeneration. In this study, chitosan microspheres (CMs) were prepared and combined with absorbable collagen sponge to maintain controlled-release recombinant human bone morphogenetic protein-2 (rhBMP-2). The rhBMP-2-loaded composite scaffolds were implanted into 15 mm radius defects of rabbits and the bone-repair ability was evaluated systematically. CMs were spherical in shape and had a polyporous surface, according to SEM images. The complex scaffold exhibited an ideal releasing profile in vitro. The micro-computed tomographic analysis revealed that the rhBMP-2-loaded composite scaffold not only bridged the defects as early as 4 weeks, but also healed the defects and presented recanalization of the bone-marrow cavity at 12 weeks. These results were confirmed by x-ray. When compared with other control groups, the composite scaffold group remarkably enhanced new bone formation and mechanical properties, as evidenced by bone mineral content evaluation, histological observations and biomechanical testing. Moreover, the biocompatibility and appropriate degradation of the composite scaffold could be obtained. All of these results clearly demonstrated that the composite scaffold is a promising carrier of BMP-2 for the treatment of segmental bone defects.