The effect of an early single injection of biodegradable core-shell nanoparticles (NPs) loaded with various low doses of recombinant human bone morphogenetic protein-7 (rhBMP-7/rhOP-1) on new bone regeneration and consolidation in a rabbit model of tibial distraction osteogenesis (DO) was investigated. The Regenerate bone was examined using soft radiography, densitometry, micro-computed tomography and histomorphometry. Compared to control, higher bone fill scores and a two- to three-fold increase in the quantity of mineralized tissue were prominent in the 1.0 and 5.0 μg OP-1/NPs groups, 3 weeks post-injections (P>0.05). Histologically, the distraction gap was completely ossified and the osteotomy margins poorly demarcated in those groups, one week into the consolidation phase. An up-regulation of various growth factors, ligands, and receptors was observed using immunohistochemistry. This novel hybrid delivery system maintains the bioactivity of the encapsulant, minimizes the therapeutic doses of rhOP-1, and accelerates DO via its localized, release-controlled, osteogenic, and naturally biocompatible polymeric properties.