Bone grafting procedures are commonly used for the repair, regeneration, and fusion of bones in in a wide range of orthopaedic surgeries, including large bone defects and spine fusion procedures. Autografts are the clinical gold standard, though recombinant human bone morphogenetic proteins (rhBMPs) are often used, particularly in difficult clinical situations. However, treatment with rhBMPs can have off-target effects and significantly increase surgical costs, adding to patients' already high economic and mental burden. Recent studies have identified that FDA-approved immunosuppressant drug, FK506 (Tacrolimus), can also activate the BMP pathway by binding to its inhibitors. This study tested the hypothesis that FK506, as a standalone treatment, could induce osteogenic differentiation of human mesenchymal stromal cells (hMSCs), as well as functional bone formation in a rat segmental bone defect model and rabbit spinal fusion model. FK506 potentiated the effect of low dose BMP-2 to enhance osteogenic differentiation and mineralization of hMSCs in vitro. Standalone treatment with FK506 delivered on a collagen sponge, produced consistent bone bridging of a rat critically-sized femoral defect with functional mechanical properties comparable to naïve bone. In a rabbit single level posterolateral spine fusion model, treatment with FK506 delivered on a collagen sponge successfully fused the L5-L6 vertebrae at rates comparable to rhBMP-2 treatment. These data demonstrate the ability of FK506 to induce bone formation in human cells and two challenging in vivo models, and indicate FK506 can be utilized either as a standalone treatment or in conjunction with rhBMP to treat a variety of spine disorders.