Porous composites composed of hydroxyapatite (HA), herb epimedium (EP), and chitosan (CS) were used to improve the repair of rabbit bone defects. The in vivo implantation of the HA/CS-EP showed that homogeneous bone formation occurred after 12 weeks' implantation and possessed good osteogenesis. The osteogenic process of the HA/CS-EP group was different from that of the HA/CS group. Direct bone formation of osteoblasts with HA/CS-EP as the matrix could be observed. Compared with the group filled with HA/CS, the group filled with HA/CS-EP showed significant increases in the number of osteoblasts and the bone formation area, and the areas of new bone formation in the HA/CS-EP group after 4 or 12 weeks' implantation reached 33% and 87%, respectively. The novel repair system of HA/CS-EP can induce bone formation, increase osteoblast quantity and improve osteogenesis, for EP can significantly promote the proliferation and activity of osteoblasts in the early stage and accelerate bone remodeling in the later stage. Composites containing EP could be a promising material with multifunctions of osteoinduction, osteoconduction and medication for bone repair, and herb medicine EP could be used as an osteoinduction material for bone tissue engineering.