Loss of large bone segments due to fracture resulting from trauma or tumor removal is a common clinical problem. The goal of this study was to evaluate the use of scaffolds containing testosterone, bone morphogenetic protein-2 (BMP-2), or a combination of both for treatment of critical-size segmental bone defects in mice. A 2.5-mm wide osteotomy was created on the left femur of wildtype and androgen receptor knockout (ARKO) mice. Testosterone, BMP-2, or both were delivered locally using a scaffold that bridged the fracture. Results of X-ray imaging showed that in both wildtype and ARKO mice, BMP-2 treatment induced callus formation within 14 days after initiation of the treatment. Testosterone treatment also induced callus formation within 14 days in wildtype but not in ARKO mice. Micro-computed tomography and histological examinations revealed that testosterone treatment caused similar degrees of callus formation as BMP-2 treatment in wildtype mice, but had no such effect in ARKO mice, suggesting that the androgen receptor is required for testosterone to initiate fracture healing. These results demonstrate that testosterone is as effective as BMP-2 in promoting the healing of critical-size segmental defects and that combination therapy with testosterone and BMP-2 is superior to single therapy. Results of this study may provide a foundation to develop a cost effective and efficient therapeutic modality for treatment of bone fractures with segmental defects.