This study aimed to evaluate the effect of recombinant human bone morphogenetic protein-2 (rhBMP-2) on vertical bone regeneration of edentulous ridge. Bilateral upper first and second molars of 8-week-old Wistar rats were extracted and the ridges were allowed to heal for 3 weeks. Compressed poly(lactic-co-glycolic acid) copolymer/gelatin sponge (PGS) was used as a carrier of rhBMP-2. PGS alone (control group) or PGS with 5 μg rhBMP-2 (test group) was implanted at the top part of alveolar ridge. The sham group received no implantation. The rats were killed at 1, 2, 4, 8 and 12 weeks after implantation and examined histologically and histomorphometrically. In the test group, significant bone augmentation was evident on the alveolar ridge throughout the experimental period. Histomorphometric analysis revealed greater tissue volume and height of alveolar bone in the test group compared with the control and sham groups (P < 0·05) from 4 weeks onward and the augmented tissues (5 mm3 in tissue volume and 1·5 mm in bone height) were maintained until 12 weeks. Osteoblast surface increased at 2 and 4 weeks and osteoid thickness reached a peak (25 μm) at 2 weeks. Dynamic variables, which represented calcification, were higher in the test group than the control and sham groups at 4 and 8 weeks (P < 0·05). These results suggest that use of rhBMP-2/PGS may achieve vertical bone augmentation, and stabilizes denture prosthesis or makes up for inadequate bone mass for implant prosthesis.