Large infected bone defects (IBD) are very complicated to treat due to their high variability; they often require multiple procedures. Bone autografts are the gold standard for treatment but have several drawbacks, such as a need for a second surgery site, limited grafting material, and donor site morbidity. The objective of this research was to develop a moldable synthetic bone grafting material capable of releasing both antimicrobial and osteogenic drugs over a clinically relevant time course for the treatment of IBDs. Current treatment methods for large IBDs require two separate procedures to treat the bone defect and the infection. This research sought to combine these two procedures into one implantable composite bone graft substitute for the treatment IBDs. To begin, the degradation and mechanical properties of the calcium sulfate (CS) based composite material were evaluated for different compositions. Next, the controlled drug release profiles from the composite was achieved by using a shell and core system incorporating poly(lactic-co-glycolic acid) microspheres (PLGAms). The release of vancomycin from the shell began immediately and continued over the course of 6 weeks, while the release of simvastatin from the core was delayed before being released over 4 weeks. Next, an infected, critically-sized rat femoral defect model was used to test different treatment methods with and without the composite bone graft substitute. Animals treated with locally released antibiotics had survivorship rates 24% higher than those treated with systemic antibiotics, and animals that received both antibiotics and an osteogenic drug had an increased amount of bone formation at 12 weeks compared to controls. Finally, several different anti-biofilm agents were evaluated for their ability to inhibit and/or disrupt the growth of Staphylococcus aureus (S. aureus) biofilms in vitro. Lysostaphin was the only drug investigated that was able to both inhibit and disrupt S. aureus biofilms. Furthermore, lysostaphin encapsulated into PLGAms maintained its bioactivity and may be useful for future incorporation into biofilm-combating materials. The bone grafting material developed here can be used to locally deliver drugs in a temporally controlled manner to reduce the number of procedures necessary for the treatment of complex IBDs.