The synthetic peptide, TP508 (Chrysalin), was delivered to rabbit segmental bone defects in biodegradable controlled-release PLGA microspheres to determine its potential efficacy for enhancing healing of non-critically and critically sized segmental defects. Non-critically sized radial defects were created in the forelimbs of New Zealand White rabbits, which were randomized into three treatment groups receiving 10, 50 and 100 microg doses of TP508 in the right radius and control microspheres (without TP508) in the left radius. Torsional testing of the radii at six weeks showed a significant increase in ultimate torque, failure torque, ultimate energy, failure energy, and stiffness when treated with TP508 compared to controls (p<0.01 for all measures). Thus, TP508 appeared to enhance or accelerate bone growth in these defects. In a second set of experiments, critically sized ulnar defects were created in the forelimbs of New Zealand White rabbits, which were randomized into two groups with each rabbit receiving microspheres with 100 or 200 microg of TP508 into the right ulnar defect and control microspheres (without TP508) alone into the left ulnar defect. Bone healing was evaluated with plain radiographs, synchrotron-based microtomography, and mechanical testing. Radiographs of the rabbit limbs scored by three blinded, independent reviewers demonstrated a significantly higher degree of healing when treated with TP508 than their untreated control limbs (p<0.05). Three-dimensional synchrotron tomography of a limited number of samples showed that the new bone in TP508-treated samples had a less porous surface appearance and open marrow spaces, suggesting progression of bone remodeling. Torsional testing of the ulnae at nine weeks showed a significant increase in maximum torque and failure energy when treated with TP508 compared to controls (p<0.01 for both measures). These results suggest that TP508 in a controlled release delivery vehicle has the potential to enhance healing of segmental defects in both critically and non-critically sized defects.