A functional biomaterial with a therapeutic effect is desirable as an adjuvant therapy to enhance bone formation and prevent local recurrence of bone tumours, especially when the resection margins are not identifiable. In this study, novel composite materials were developed with dual properties of osteopromotion and bone resorption to mimic the tumour inhibition effect, including water-soluble phosphorylated chitosan (P-chitosan) for increasing osteoblasts activity and disodium (1 → 4)-2-deoxy-2-sulphoamino-β-d-glucopyranuronan (S-chitosan) for inhibiting bone resorption activity. First, P-chitosan and S-chitosan were respectively incorporated into two kinds of PLGA/TCP-based scaffold, i.e. PLGA–TCP–P-chitosan (P/T/P-chitosan) and PLGA–TCP–S-chitosan (P/T/S-chitosan) scaffolds. We subsequently tested combined scaffolds of PLGA–TCP–P–S–P-chitosan (P/T/PSP-chitosan) made of P/T/P-chitosan and P/T/S-chitosan to assess their integral effect, on enhancement of bone formation with P/T/P-chitosan and inhibition of tissue regeneration with P/T/S-chitosan, in an established rabbit ulnar bone defect model to imitate bone resection post-bone tumour. To compare bone healing in the defects, the P/T/P-chitosan group was regarded as a bone formation enhancement group, while the P/T group served as a control. Bone mineral density (BMD) in the P/T/P-chitosan and P/T/PSP-chitosan groups were found to be significantly higher than those in the P/T group, while that in the P/T/P-chitosan group was greater than that in the P/T/PSP-chitosan group (p < 0.05). These findings demonstrated that P/T/PSP-chitosan scaffolds possessed more osteogenic potential than the P/T scaffold but less osteogenic effect than the P/T/P-chitosan scaffold, as the S-chitosan component inhibited the activities of osteoblasts for bone formation. These findings implied a dual function of the designed P/T/PSP-chitosan for further preclinical validation and potential applications in the prevention of local recurrence and for enhancing bone repair after bone tumour resection. Copyright © 2013 John Wiley & Sons, Ltd.