Spatiotemporal release of growth factors from a delivery device can profoundly affect the efficacy of bone growth induction. Here, we report on a delivery platform based on the encapsulation of insulin-like growth factor I (IGF-I) in different poly(d,l-lactide) (PLA) and poly(d,l-lactide-co-glycolide) (PLGA) microsphere (MS) formulations to control IGF-I release kinetics. In vitro IGF-I release profiles generally exhibited an initial burst (14–36% of total IGF-I content), which was followed by a more or less pronounced dormant phase with little release (2 to 34 days), and finally, a third phase of re-increased IGF-I release. The osteoinductive potential of these different IGF-I PL(G)A MS formulations was tested in studies using 8-mm metaphyseal drill hole bone defects in sheep. Histomorphometric analysis at 3 and 6 weeks after surgery showed that new bone formation was improved in the defects locally treated with IGF-I PL(G)A MS (n = 5) as compared to defects filled with IGF-I-free PL(G)A MS (n = 4). The extent of new bone formation was affected by the particular release kinetics, although a definitive relationship was not evident. Local administration of IGF-I resulted in down-regulation of inflammatory marker genes in all IGF-I treated defects. The over-expression of growth factor genes in response to IGF-I delivery was restricted to formulations that produced osteogenic responses. These experiments demonstrate the osteoinductive potential of sustained IGF-I delivery and show the importance of delivery kinetics for successful IGF-I-based therapies.