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Nonunion is a common complication in open fractures and other severe bone injuries. Recombinant human bone morphogenetic protein-2 (rhBMP-2) delivered on a collagen sponge enhances healing of fractures. However, the burst release of rhBMP-2 necessitates supra-physiological doses of rhBMP-2 to achieve a robust osteogenic effect, which introduces risk of ectopic bone formation and severe inflammation and increases the cost. Although the concept that the ideal pharmacokinetics for rhBMP-2 includes both a burst and sustained release is generally accepted, investigations into the effects of the release kinetics on new bone formation are limited. In the present study, biodegradable polyurethane (PUR) and PUR/microsphere [PUR/poly(lactic-co-glycolic acid)] composite scaffolds with varying rhBMP-2 release kinetics were compared to the collagen sponge delivery system in a critical-sized rat segmental defect model. Microcomputed tomography analysis indicated that a burst followed by a sustained release of rhBMP-2 from the PUR scaffolds regenerated 50% more new bone than the collagen sponge loaded with rhBMP-2, whereas a sustained release without the burst did not form significantly more bone than the scaffold without rhBMP-2. This study demonstrated that the putative optimal release profile (i.e., burst followed by sustained release) for rhBMP-2 can be achieved using PUR scaffolds, and that this enhanced pharmacokinetics regenerated more bone than the clinically available standard of care in a critical-sized defect in rat femora.