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Abstract Atrophic fracture nonunion poses a significant clinical problem with limited therapeutic interventions. In this study, we developed a unique nonunion model with high clinical relevance using serum transfer-induced rheumatoid arthritis (RA). Arthritic mice displayed fracture nonunion with the absence of fracture callus, diminished angiogenesis and fibrotic scar tissue formation leading to the failure of biomechanical properties, representing the major manifestations of atrophic nonunion in the clinic. Mechanistically, we demonstrated that the angiogenesis defect observed in RA mice was due to the downregulation of SPP1 and CXCL12 in chondrocytes, as evidenced by the restoration of angiogenesis upon SPP1 and CXCL12 treatment in vitro. In this regard, we developed a biodegradable scaffold loaded with SPP1 and CXCL12, which displayed a beneficial effect on angiogenesis and fracture repair in mice despite the presence of inflammation. Hence, these findings strongly suggest that the sustained release of SPP1 and CXCL12 represents an effective therapeutic approach to treat impaired angiogenesis and fracture nonunion under inflammatory conditions.