The aim of this study was to determine the effects of glutathione-S-transferase-fused recombinant biglycan (GST-BGN) on craniofacial bone regeneration. We recently demonstrated a positive effect of tissue-derived BGN on bone morphogenetic protein 2 (BMP-2) function, which is exerted likely via the BGN core protein. Here, we investigated the effects of GST-BGN lacking any posttranslational modifications on BMP-2 function in vitro and in vivo. In the C2C12 cell culture system, BMP-2-induced Smad 1/5/8 phosphorylation and alkaline phosphatase activity were both enhanced by the addition of GST-BGN. For the in vivo effect, we employed a Sprague-Dawley rat mandible defect model utilizing 1 µg (optimal) or 0.1 µg (suboptimal) of BMP-2 combined with 0, 2, 4, or 8 µg of GST-BGN. At 2 weeks post-surgery, newly formed bone was evaluated by microcomputed tomography and histologic analyses. The results revealed that the greatest amounts of bone within the defect were formed in the groups of suboptimal BMP-2 combined with 4 or 8 µg of GST-BGN. Also, bone was well organized versus that formed by the optimal dose of BMP. These results indicate that recombinant BGN is an efficient substrate to promote low-dose BMP-induced osteogenesis.