Bisphosphonates (BPs)-associated atypical femoral fractures (AFFs) present with impaired fracture healing, yet the underlying mechanism is unclear, which prevents the development of effective therapy. Peripheral sensory nerve has been shown to regulate fracture healing via releasing neuropeptides. Here we show that long-term BPs pre-treatment leads to fracture non-union in rats, characterized by reduced expression of calcitonin gene-related peptide (CGRP, a predominant type of neuropeptides) and abundant fibrous tissues in the non-bridged fracture gap, mimicking clinical AFFs. By using single-cell RNA-sequencing, long-term BPs treatment was identified to promote transition of progenitor cells into a specific cluster of fibroblasts that actively deposit dense extracellular matrix (ECM) to prevent fracture callus bridging. Administration of exogenous CGRP at early stages of fracture repair, in contrast, eliminates the ECM-secreting fibroblast cluster, attenuates fibrogenesis, and facilitates callus bridging, suggesting CGRP is a promising agent to facilitate AFF healing. Accordingly, we have developed an innovative magnesium (Mg) containing hybrid intramedullary nail fixation system (Mg-IMN) to effectively rescue BPs-impaired fracture healing via elevating CGRP synthesis and release. Such device optimizes the fracture healing in BPs-pretreated rats, comparable to direct administration of CGRP. These findings address the indispensable role of CGRP in advancing the healing of AFFs and develop translational strategies to accelerate AFF healing by taking advantage of the CGRP-stimulating effect of Mg-based biodegradable orthopedic implant. The study also indicates fibrosis could be targeted by augmenting CGRP expression to accelerate fracture healing even under challenging scenarios where fibroblasts are aberrantly activated.