Background Nanobone putty is an injectable and bioresorbable bone substitute. The neutral-pH putty resembles hard bone tissue, does not contain polymers or plasticizers, and is self-setting and nearly isothermic, properties which are helpful for the adhesion, proliferation, and function of bone cells. The aim of this study was to investigate the osteogenic potential of human bone morphogenetic protein 2(hBMP2)gene activated nanobone putty in inducing ectopic bone formation, and the effects of the hBMP2 gene activated nanobone putry on repairing bone defects. Methods Twenty four Kunming mice were randomly divided into two groups. The nanobone putty+hBMP2 plasmid was injected into the right thigh muscle pouches of the mice(experiment side). The nanobone putty+blank plasmid or nanobone putty was injected into the left thigh muscle pouches of the group 1(control side 1)or group 2(control side 2), respectively. The effects of ectopic bone formation were evaluated by radiography, histology, and molecular biology analysis at 2 and 4 weeks after operation. Bilateral 15 mm radial defects were made in forty-eight rabbits. These rabbits were randomly divided into three groups: Group A, nanobone putty+hBMP2 plasmid;Group B, putty+blank plasmid; Group C, nanobone putty only. Six rabbits with left radial defects served as blank controls. The effect of bone repairing was evaluated by radiography, histology, molecular biology, and biomechanical analysis at 4, 8, and 12 weeks after operation. Results The tissue from the experimental side of the mice expressed hBMP2. Obvious cartilage and island-distributed immature bone formation in implants of the experiment side were observed at 2 weeks after operation, and massive mature bone observed at 4 weeks. No bone formation was observed in the control side of the mice. The ALP activity in the experiment side of the mice was higher than that in the control side. The tissue of Group A rabbits expressed hBMP2 protein and higher ALP level. The new bone formation rate and antibending strength of group A was significantly higher than those of group B and C. The defects in blank control were not healed. Conclusions The hBMP2 gene activated nanobone putty exhibited osteoinductive ability, and had a better bone defect repair capability than that of nanobone putty only.