Due to the similar collagen composition and closely physiological relationship with soft connective tissues, demineralized bone matrices (DBMs) were used to repair the injured tendon or ligament. However, the osteoinductivity of DBMs would be a huge barrier of these applications. Hydrogen peroxide (H2O2) has been proved to reduce the osteoinductivity of DBMs. Nevertheless, the biological properties of H2O2‐treated DBMs have not been evaluated completely, while the potential mechanism of H2O2 compromising osteoinductivity is also unclear. Hence, the purpose of this study was to characterize the biological properties of H2O2‐treated DBMs and search for the proof that H2O2 could compromise osteoinductivity of DBMs. Decellularized and demineralized bone matrices (DCDBMs) were washed by 3% H2O2 for 12 h to fabricate the H2O2‐treated DCDBMs (HPTBMs). Similar biological properties including collagen, biomechanics, and biocompatibility were observed between DCDBMs and HPTBMs. The immunohistochemistry staining of bone morphogenetic protein 2 (BMP‐2) was negative in HPTBMs. Furthermore, HPTBMs exhibited significantly reduced osteoinductivity both in vitro and in vivo. Taken together, these findings suggest that the BMP‐2 in DCDBMs could be the target of H2O2. HPTBMs could be expected to be used as a promising scaffold for tissue engineering. © 2019 Wiley Periodicals, Inc. J Biomed Mater Res Part A, 2019.