Considerable research has been focused on the development of bone morphogenetic protein-2 (BMP-2) delivery system for homologous and efficient bone regeneration. The aim of the present study was to develop a collagen-based targeting bone repair system. A collagen-binding domain (CBD) was added to the N-terminal of native BMP-2 to allow it bind to collagen specifically. We showed that the collagen-binding bone morphogenetic protein-2 (named bone morphogenetic protein2-h, BMP2-h) had maintained the full biological activity as compared to rhBMP2 lacking the CBD. In vitro functional study also demonstrated that collagen matrix could maintain higher bioactivity of BMP2-h than native BMP-2. When demineralized bone matrix (DBM) impregnated with BMP2-h was implanted subcutaneously in rats, homogeneous bone formation was observed. Moreover, in a rabbit mandible defect model, surgical implantation of collagen matrix loaded with BMP2-h exhibited remarkable osteoinductive properties and excellent homogeneous bone formation. Our studies suggested that this novel collagen-based BMP-2 targeting bone repair system induced better bone formation not only in quantity but also in quality. Similar approaches may also be used for the repair of other tissue injuries.