This study defined and compared the course of native, impaired and growth factor-stimulated bone regeneration in a rat femoral defect model. A mid-diaphyseal defect with rigid internal fixation was surgically created in the right femur of male Fischer rats and serially analyzed over 36 weeks. Native bone regeneration was modeled using a sub-critical, 1 mm size defect, which healed uneventfully. Critical size defects of 5 mm were used to analyze impaired bone regeneration. In a third group, the 5 mm defects were filled with 11 µg of recombinant human bone morphogenetic protein 2 (rhBMP2) impregnated onto an absorbable collagen sponge, modeling its clinical use. Native bone regeneration was characterized by endochondral ossification with progressive remodeling to ultimately resemble intact femora. An endochondral response was also observed under conditions of impaired bone regeneration, but by week 8 medullary capping occurred with fibrofatty consolidation of the tissue within the defect, resembling an atrophic non-union. rhBMP2 treatment was associated with prolonged inflammatory cytokine expression and rapid intramembranous bone formation occurring with reduced expression of cartilage-associated collagens. Between weeks 4 and 36, rhBMP2-treated bones demonstrated decreased trabecular number and increased trabecular separation, which resulted in inferior mechanical properties compared with bones that healed naturally. Clinical Significance:​ Recombinant human bone morphogenetic protein 2 (rhBMP2) is used clinically to promote healing of long bones. Our data suggest that it drives intramembraneous ossification producing an inferior regenerate that deteriorates with time. Clinical outcomes would be improved by technologies favoring endochondral regenerative ossification.