Bone morphogenetic protein-7 (BMP-7) promotes not only osteogenesis but also matrix production in chondrocytes and tenocytes. However, because of its short half-life, maintaining local concentrations of BMP-7 is difficult. We examined the use of a gelatin hydrogel sheet (GHS) for the sustained release of BMP-7 in stimulating rotator cuff repair at the tendon-to-bone insertion. Twelve-week-old male Sprague-Dawley rats were used. Radiolabeled BMP-7 ((125)I-BMP-7) was injected into the subacromial bursa in the (125)I-BMP-7 group, whereas a GHS impregnated with (125)I-BMP-7 was implanted on the tendon attached to the tendon-to-bone insertion in the (125)I-BMP-7+GHS group. Levels of (125)I-BMP-7 in the tendon-to-bone insertion were assessed at 1, 3, 7, 14, and 21 postoperative days. The BMP-7 concentrations were significantly higher in the (125)I-BMP-7+GHS group than in the (125)I-BMP-7 group. Next, the bilateral supraspinatus tendons were resected and sutured to the greater tuberosity of the humerus using the Mason-Allen technique. Treatment groups were created as follows: either phosphate-buffered saline (PBS) or BMP-7 was injected into the subacromial bursa in the PBS and BMP-7 groups, whereas a GHS impregnated with either PBS or BMP-7 was implanted on the repaired tendon attached to the tendon-to-bone insertion in the PBS+GHS and BMP-7+GHS groups. The resected specimens were stained at 2, 4, and 8 postoperative weeks with hematoxylin and eosin as well as Safranin O, and tissue repair was evaluated histologically by using the tendon-to-bone maturing score. Tissue repair was assessed biomechanically at 4 and 8 postoperative weeks. The BMP-7+GHS group at 8 postoperative weeks demonstrated a favorable cartilage matrix production and tendon orientation; moreover, the tendon-to-bone maturing score and the ultimate force-to-failure were the highest in this group. The ability of GHS to provide controlled release of various growth factors has been previously reported. We confirmed that the GHS releases BMP-7 in a sustained manner in the rat shoulder joint. At 8 postoperative weeks, the repaired tissue was mostly restored, both histologically and biomechanically, in the BMP-7+GHS group. We therefore conclude that the sustained release of BMP-7 from a GHS can stimulate rotator cuff repair.