Off the shelf availability in large quantities, drug delivery functionality, and modifiable chemistry and mechanical properties makes synthetic polymers highly suitable candidates for bone grafting. However, most synthetic polymers lack the ability to support cell attachment, proliferation, migration and differentiation and ultimately tissue formation. Incorporating anionic peptides into the polymer that mimic acidic proteins, which contribute to biomineralization and cellular attachment, could enhance bone formation. Therefore, this study investigates the effect of a phosphate functional group on osteoconductivity and BMP-2 induced bone formation in an injectable and biodegradable oligo[(polyethylene glycol) fumarate] (OPF) hydrogel. Three types of OPF hydrogels were fabricated using 0%, 20% or 40% Bis(2-(methacryloyloxy)ethyl) phosphate (BP) creating unmodified OPF-noBP and phosphate modified OPF-BP20 and OPF-BP40, respectively. To account for the osteoinductive effect of various BMP-2 release profiles, two different release profiles (i.e. different ratios of burst and sustained release) were obtained by varying the BMP-2 loading method. To investigate the osteoconductive effect of phosphate modification, unloaded OPF composites were assessed for bone formation in a bone defect model after 3, 6 and 9 weeks. To determine the effect of the hydrogel phosphate modification on BMP-2 induced bone formation, BMP-2 loaded OPF composites with differential BMP-2 release were analyzed after 9 weeks of subcutaneous implantation in rats. The phosphate modified OPF hydrogels (OPF-BP20, OPF-BP40) generated significantly more bone in an orthotopic defect compared to the unmodified hydrogel (OPF-noBP). Furthermore, the phosphate functionalized surface enhanced BMP-2 induced ectopic bone formation regardless of the BMP-2 release profile. In conclusion, this study clearly shows that phosphate functional groups improve the osteoconductive properties of OPF and enhanced BMP-2 induced bone formation. Therefore, functionalizing hydrogels with phosphate groups by crosslinking monomers into the hydrogel matrix could provide a valuable method for improving polymer characteristics and hold great promise for bone tissue engineering.