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Inflammation‐responsive hydrogels loaded with therapeutic factors are effective biomaterials for bone tissue engineering and regenerative medicine. In this study, a matrix metalloproteinase (MMP)‐responsive injectable hydrogel is constructed by integrating an MMP‐cleavable peptide (pp) into a covalent tetra‐armed poly‐(ethylene glycol) (PEG) network for precise drug release upon inflammation stimulation. To establish a pro‐regenerative environment, phosphatidylserine (PS) is encapsulated into a scaffold to form the PEG‐pp‐PS network, which could be triggered by MMP to release a large amount of PS during the early stage of inflammation and retain drug release persistently until the later stage of bone repair. The hydrogel is found to be mechanically and biologically adaptable to the complex bone defect area. In vivo and in vitro studies further demonstrated the ability of PEG‐pp‐PS to transform macrophages into the anti‐inflammatory M2 phenotype and promote osteogenic differentiation, thus, resulting in new bone regeneration. Therefore, this study provides a facile, safe, and promising cell‐free strategy on simultaneous immunoregulation and osteoinduction in bone engineering. [ABSTRACT FROM AUTHOR]