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Traumatic composite bone‐muscle injuries, such as open fractures, often require multiple surgical interventions and still typically result in long‐term disability. Clinically, a critical indicator of composite injury severity is vascular integrity; vascular damage alone is sufficient to assign an open fracture to the most severe category. Challenging bone injuries are often treated with bone morphogenetic protein 2 (BMP‐2), an osteoinductive growth factor, delivered on collagen sponge. Previous studies in a composite defect model found that a minimally bridging dose in the segmental defect model was unable to overcome concomitant muscle damage, but the effect of BMP dose on composite injuries has not yet been studied. Here, we test the hypotheses that BMP‐2‐mediated functional regeneration of composite extremity injuries is dose dependent and can be further enhanced via co‐delivery of adipose‐derived microvascular fragments (MVF), which have been previously shown to increase tissue vascular volume. Although MVF did not improve healing outcomes, we observed a significant BMP‐2 dose‐dependent increase in regenerated bone volume and biomechanical properties. This is the first known report of an increased BMP‐2 dose improving bone healing with concomitant muscle damage. While high dose BMP‐2 delivery can induce heterotopic ossification (HO) and increased inflammation, the maximum 10 μg dose used in this study did not result in HO and was associated with a lower circulating inflammatory cytokine profile than the low dose (2.5 μg) group. These data support the potential benefits of an increased, though still moderate, BMP‐2 dose for treatment of bone defects with concomitant muscle damage. Published 2019. This article is a U.S. Government work and is in the public domain in the USA. J Orthop Res [ABSTRACT FROM AUTHOR]