Osteoporosis often leads to fragility fractures of the hip, resulting in impaired quality of life and increased mortality. Augmenting the proximal femur could be an attractive option for prevention of fracture or fixation device failure. We describe a tissue engineering based strategy to enhance long-term bone formation in the femoral neck of osteoporotic rats by locally delivering bioactive molecules; recombinant human bone morphogenic protein-2 (rhBMP-2), and zoledronic acid (ZA) by using a calcium sulfate/ hydroxyapatite (CaS/HA) biomaterial. A defect was created by reaming the femoral neck canal of osteoporotic (OVX) rats and they were treated as follows: G1. Empty, G2. CaS/HA, G3. CaS/HA+Systemic ZA, G4. CaS/HA+Local ZA, and G5. CaS/HA+Local ZA+rhBMP-2. Bone formation was evaluated 6 months after treatment. Further, radioactively labeled 14C-ZA was used to study the bioavailability of ZA at the defect location, which was determined by using scintillation counting. Micro-CT indicated significantly higher bone volume in groups G4 and G5 compared with the other treatment groups. This was confirmed qualitatively by histological assessment. Addition of rhBMP-2 gave no additional benefit in this model. Local delivery of ZA performed better than systemic administration of ZA. Mechanical testing showed no differences between the groups, likely reflecting that the addition of bioactive molecules had limited effect on cortical bone or the choice of mechanical testing setup was not optimal. Scintillation counting revealed higher amounts of 14C-ZA present in the treated leg of G4 compared with its contralateral control and compared with G3, indicating that local ZA delivery can be used to achieve high local concentrations without causing a systemic effect. This long-term study shows that local delivery of ZA using a CaS/HA carrier can regenerate cancellous bone in the femoral neck canal and has clear implications for enhancing implant integration and fixation in fragile bone.