There is a compelling clinical need for bone grafts with initial bone-like mechanical properties that actively remodel for repair of weight-bearing bone defects, such as fractures of the tibial plateau and vertebrae. However, there is a paucity of studies investigating remodeling of weight-bearing bone grafts in preclinical models, and consequently there is limited understanding of the mechanisms by which these grafts remodel in vivo. In this study, we investigated the effects of the rates of new bone formation, matrix resorption, and polymer degradation on healing of settable weight-bearing polyurethane/allograft composites in a rabbit femoral condyle defect model. The grafts induced progressive healing in vivo, as evidenced by an increase in new bone formation, as well as a decrease in residual allograft and polymer from 6 to 12 weeks. However, the mismatch between the rates of autocatalytic polymer degradation and zero-order (independent of time) new bone formation resulted in incomplete healing in the interior of the composite. Augmentation of the grafts with recombinant human bone morphogenetic protein-2 not only increased the rate of new bone formation, but also altered the degradation mechanism of the polymer to approximate a zero-order process. The consequent matching of the rates of new bone formation and polymer degradation resulted in more extensive healing at later time points in all regions of the graft. These observations underscore the importance of balancing the rates of new bone formation and degradation to promote healing of settable weight-bearing bone grafts that maintain bone-like strength, while actively remodeling.