BACKGROUND: Autologous bone remains the gold standard for surgical bone reconstruction but presents clinical challenges like donor site complications and operational difficulties. METHOD: We investigate the osteogenic effects of a newly designed, ceramic and collagen-based, submicron-processed Flexible Hydrated-Hardening Bone Graft (FHBG), using both murine and human mesenchymal stem cells. We also compare the efficacy and safety of FHBG with a commercially available (CA) graft in New Zealand white rabbits with cranial bone defects. Rabbits were divided into three groups: no graft, CA, and FHBG, and evaluated using Micro-CT and histological analysis at three and six weeks post-surgery. Safety was assessed through blood samples. RESULTS: In vitro, FHBG promoted osteogenesis and upregulated osteogenic-associated genes in mesenchymal stem cells. In vivo, FHBG significantly enhanced bone regeneration, showing approximately 25% and 30% more improvement than the control at three and six weeks post-surgery. FHBG also had about half the residual content compared to the CA group. Blood analysis showed no hepatotoxicity or nephrotoxicity associated with the graft. CONCLUSION: FHBG significantly promotes bone regeneration both in vitro and in vivo. Additionally, FHBG has been demonstrated to be safe, with fewer residuals remaining in the body compared to currently in-use clinical bone grafts. This study validates the ability of the newly designed FHBG to facilitate osteogenesis in vitro and demonstrates its efficacy and safety in new bone formation in vivo. The lower residual material further suggests a reduced long-term impact and associated risk with the graft.