This study reports the in vitro and in vivo biological activities of recombinant human bone morphogenetic protein 2 (rhBMP-2) released from the core-shell structure of a nanofibrous barrier membrane as a sustained delivery model for bone regeneration. RhBMP-2 incorporating poly(ethylene glycol) was used as the core, and poly(caprolactone) was used as the shell surrounding the core. To determine its release profiles, the release solution was collected and the amount of rhBMP-2 was measured by ELlSA at different time points. In vitro rhBMP-2, released from the delivery system over at least 24 days, reached a stable rate of 500 pg per day and guided bone marrow mesenchymal stem cells (BMMSCs) to express osteogenic genes. The distribution and proliferation of BMMSCs in the nanofibrous barrier membrane was measured by laser confocal scanning microscopy (LCSM) and scanning electron microscopy (SEM). The biological activity of rhBMP-2 was tested in BMMSC/membrane culture in vitro and in a rabbit calvarium defect model in vivo. Osteogenic genes osteonectin (ON) and core binding factor-α1 (Cbf-α1) expression of the BMMSCs cultured on the BMP-2-PEG/PCL membrane were significantly higher than those of cells on the PEG/PCL membrane at the late time points using real-time PCR (p < 0.05). The membranes containing the rhBMP-2 group exhibited the fastest and most bone formation compared to others in rabbit cranial defect models (p < 0.05). This study revealed that rhBMP-2 could be incorporated into a core-shell electrospun membrane, and preserve sustained release capability and biological activity. © 2012 Wiley Periodicals, Inc. J Biomed Mater Res Part B: Appl Biomater, 2013.