Large bone defects can be difficult to treat, even with autografts. Bone graft substitutes, such as calcium sulfate (CS), calcium phosphate cements, and hydroxyapatite, are receiving significant attention because of their biocompatibility and potential for incorporation of therapeutic agents. To create a bone filler capable of treating irregularly shaped, often infected, bony defects, microspheres and a plasticizer were added to CS, resulting in a moldable composite capable of being loaded with biomolecules. Different compositions and setting environments, such as immersion in saline, a humidified incubator, or room temperature air, were investigated to determine their effects on mechanical strength and degradation rate of the composites. Addition of any other components to the CS, such as plasticizers or microspheres composed of biopolymers (gelatin, hyaluronan [HY], cellulose acetate phthalate, and carboxymethylcellulose), increased its functionality but reduced mechanical strength. The compressive modulus and strength of the composite fillers ranged from 10 to 350 MPa and 5 to 20 MPa, respectively, depending on the composition. This moldable bone filler degraded in 18–20 days when placed in solution and was able to set in harsh environments given a composition that did not retain too much water. By combining a plasticizing agent, such as HY with CS, a composite material has been developed that is moldable, sets in situ, and maintains its mechanical stability. With these desirable properties for a bone graft substitute and the potential to be loaded with bioactive drugs, this composite material merits further investigation for the future treatment of bony defects. © 2012 Wiley Periodicals, Inc. J Biomed Mater Res Part A, 2013.