Large bone defects in long bones pose a significant clinical challenge due to the lack of suitable grafts. Recently, decellularized bone matrix has drawn attention, since it can be used as a bioactive ingredient to fabricate scaffolds for bone regeneration. However, residual DNA in the decellularized matrix is a potential hindrance that can trigger an immunogenic rejection. We hypothesized that extraction of the extracellular matrix (ECM), with low DNA contents, and its subsequent conversion to a microsphere could be an ideal strategy to exploit the structural and molecular cues that exist within the ECM. In this study, we derived a decellularized bone matrix with negligible DNA contents to prepare microspheres. We further functionalized the microsphere with nanohydroxyapatite and metformin hydrochloride (MF) to enhance its inherent bioactivity. The fabrication and subsequent physicochemical characterization revealed that the composite microspheres were successfully furnished with suitable physicochemical properties. Biological evaluation of microspheres revealed a positive correlation between bioactive microspheres and osteogenic proliferation and differentiation. In vivo experiments further demonstrated the potential of microspheres to contract the bone with the highly dense and organized bone matrix. Hence, the microsphere could be a potential candidate for repairing large bone defects.