Enhancement of in vivo mobilization and homing of endogenous mesenchymal stem cells (MSCs) to an injury site is an innovative strategy for improvement of bone tissue engineering and repair. The present study was designed to determine whether mobilization by AMD3100 and/or local homing by delivery of stromal cell-derived factor-1 (SDF-1) enhances recombinant human bone morphogenetic protein-2 (rhBMP-2) induced ectopic bone formation in an established rat model. Rats received an injection of either saline or AMD3100 treatment 1 h before harvesting of bone marrow for in vitro colony-forming unit-fibroblasts (CFU-F) culture or the in vivo subcutaneous implantation of absorbable collagen sponges (ACSs) loaded with saline, recombinant human bone morphogenetic protein-2 (rhBMP-2), SDF-1, or the combination of SDF-1 and rhBMP-2. AMD3100 treatment resulted in a significant decrease in CFU-F number, compared with saline, which confirmed that a single systemic AMD3100 treatment rapidly mobilized MSCs from the bone marrow. At 28 and 56 days, bone formation in the explanted ACS was assessed by microcomputed tomography (μCT) and histology. At 28 days, AMD3100 and/or SDF-1 had no statistically significant effect on bone volume (BV) or bone mineral content (BMC), but histology revealed more active bone formation with treatment of AMD3100, loading of SDF-1, or the combination of both AMD3100 and SDF-1, compared with saline-treated rhBMP-2 loaded ACS. At 56 days, the addition of AMD3100 treatment, loading of SDF-1, or the combination of both resulted in a statistically significant stimulatory effect on BV and BMC, compared with the saline-treated rhBMP-2 loaded ACS. Histology of the 56-day ACS were consistent with the μCT analysis, exhibiting more mature and mineralized bone formation with AMD3100 treatment, SDF-1 loading, or the combination of both, compared with the saline-treated rhBMP-2 loaded ACS. The present study is the first that provides evidence of the efficacy of AMD3100 and SDF-1 treatment to stimulate trafficking of MSCs to an ectopic implant site, in order to ultimately enhance rhBMP-2 induced long-term bone formation.