Periodontitis is a very severe inflammatory condition of the periodontium that progressively damages the soft tissue and destroys the alveolar bone that supports the teeth. The bone loss is naturally irreversible because of limited reparability of the teeth. Advancement in tissue engineering provides an effective regeneration of osseous defects with suitable dental implants or tissue-engineered constructs. This study reports a hydroxyapatite, calcium sulfate hemihydrate and hyaluronic acid laden collagenase (HAP/CS/HA-Col) as a bone substitute for the alveolar bone regeneration. The composite material was mechanically tested and the biocompatibility was evaluated by WST-1 assay. The in vivo bone formation was assessed in rat with alveolar bone defects and the bone augmentation by the HAP/CS/HA-Col composite was confirmed by micro-CT images and histological examination. The mechanical strength of 6.69 MPa with excellent biocompatibility was obtained for the HAP/CS/HA-Col composite. The collagenase release profile had facilitated the acceleration of bone remodeling process and it was confirmed by the findings of micro-CT and H&E staining. The bone defects implanted with HAP/CS/HA composite containing 2 mg/mL type I collagenase have shown improved new bone formation with matured bone morphology in comparison with the HAP/CS/HA composite that lacks the collagenase and the porous hydroxyapatite (p-HAP) granules. The said findings demonstrated that the collagenase inclusion in HAP/CS/HA composite is a feasible approach for the alveolar bone regeneration and the same design can also be applied to other defective tissues.