Objective To study the efficacy of repairing bone defect with the composite of allogeneic morselized bone, bone morphogenetic protein(BMP)and collagen. Methods 1.5 cm long bone defect was created in each radius of 34 New Zealand rabbits. A composite of 200mg allogeneic minute morselized bone with 10 mg BMP and 0.2 ml collagen was placed into the bone defect of left radius in each rabbit (group A); the contralateral bone defect was filled with a composite of 200 mg allogeneic morselized bone and 0.2 ml collagen (group B). The bone mineral density(BMD)of the defects was evaluated at 8 and 12 weeks. The biomechanic tests were examined at 12 weeks. In group C, only 0.2 ml collagen was implanted as control. Results Radiological and histological examination revealed that the defects healed completely in both experimental groups, but there were more new bone formation, early bridging and rapid healing in group A compared with that of group B. The value of BMD in group A was higher than that in group B. The three-points bending test of group A showed that ultimate strength and bending stiffness were superior than that of group B, the anti- axial compressive stiffness as well; and the torsion rigidity and maximal torque of group A were also greater than that of group B. There were significantly statistic differences in all biomechanical tests between the two groups. Histological evaluations displayed that there were significant differences in matured level of new bone formation and remodeling process between two experimental groups. The new lamellar cortical bone formation was more matured, and the remodeling process was more perfect in group A comparing to that of group B, which might contribute to the better mechanical properties of group A. The defects did'nt achieve any osseous healing in control group. Conclusion The allogeneic morselized bone can be used effectively to repair segmental bone defects. The experiment suggests that the bone healing process can be promoted by the composite morselized bone graft with BMP and collagen.