Diabetes mellitus (DM) involves metabolic changes that can impair bone repair, including a prolonged inflammatory response. A salicylic acid-based poly(anhydride-ester) (SA-PAE) provides controlled and sustained release of salicylic acid (SA) that locally resolves inflammation. This study investigates the effect of polymer-controlled SA release on bone regeneration in diabetic rats where enhanced inflammation is expected. Fifty-six Sprague-Dawley rats were randomly assigned to two groups: diabetic group induced by streptozotocin (STZ) injection or normoglycemic controls injected with citrate buffer alone. Three weeks after hyperglycemia development or vehicle injection, 5mm critical sized defects were created at the rat mandibular angle and treated with SA-PAE/bone graft mixture or bone graft alone. Rats were euthanized 4 and 12weeks after surgery, then bone fill percentage in the defect region was assessed by micro-computed tomography (CT) and histomorphometry. It was observed that bone fill increased significantly at 4 and 12weeks in SA-PAE/bone graft-treated diabetic rats compared to diabetic rats receiving bone graft alone. Accelerated bone formation in normoglycemic rats caused by SA-PAE/bone graft treatment was observed at 4weeks but not at 12weeks. This study shows that treatment with SA-PAE enhances bone regeneration in diabetic rats and accelerates bone regeneration in normoglycemic animals.