The objective of this work is to show that the negative dispersion of ultrasonic waves propagating in cancellous bone can be explained by a nonlocal version of Biot's theory of poroelasticity. The nonlocal poroelastic formulation is presented in this work and the exact solutions for one- and two-dimensional systems are obtained by the method of Fourier transform. The nonlocal phase speeds for solid- and fluid-borne waves show the desired negative dispersion where the magnitude of dispersion is strongly dependent on the nonlocal parameters and porosity. Dependence of the phase speed and attenuation is studied for both porosity and frequency variation. It is shown that the nonlocal parameter can be easily estimated by comparing the theoretical dispersion rate with experimental observations. It is also shown that the modes of Lamb waves show similar negative dispersion when predicted by the nonlocal poroelastic theory.