The purpose of this study is to investigate the efficacy of bone regeneration of combined demineralized bone matrix (DBM) and osteoconductive allogeneic cancellous bone granule implantation in critical size bone defect, rabbit radius model. We grafted the mixture of DBM and allogeneic cancellous bone granules in the experimental group, and the mixture of autoclaved DBM and allogeneic cancellous bone granules in the control group in 30 New Zealand White rabbits. At the 3, 6, 9, and 12 weeks post-implantation, radiographic and bone mineral density BMD evaluation were performed, and micro-CT and histologic assessments were performed with 6 and 12 week specimens. In comparison of the results of radiographic, BMD, and micro-CT evaluations, the experimental group showed much more and earlier bone formation than the control group, which indicated the enhanced bone regeneration by the effect of DBM on allogeneic cancellous bone granule scaffolds. Histologic evaluation also revealed rapid bone resorption, new bone formation, and maturation in experimental groups. There was no inflammatory or foreign body giant cell infiltration suggesting biologic incompatibility. Combined DBM and allogeneic cancellous bone granule composite grafts will be useful alternatives to autogenous bone grafts in various clinical conditions which require bone regeneration.