Implants of demineralized bone matrix induce new bone formation. In order to estimate the possible clinical usefulness of this phenomenon, autologous cancellous bone grafts were compared with composite grafts of bone matrix and marrow. Cancellous bone from the tuber ischii of the rabbit was transplanted to a preformed radial defect in the same animal. On the opposite side, a similar defect was filled with a mixture of either allogenous or autogenous bone-matrix particles and autogenous bone marrow. After 25 days, calcium 45 was injected intravenously. Three days later the animals were killed. Standardized segments of the rabbit's forearms, containing the middle of the defect, were cut out, ashed, and analyzed for 45Ca activity. No side difference in 45Ca deposition was found. The callus ash weight of the allogenous matrix-transplanted side was approximately 60% of that of the cancellous bone side. This side difference of ash weights corresponds to the estimated initial mineral content of the cancellous graft. Nontransplanted defects had very low ash weight and 45Ca activity. Thus, in the rabbit, composite grafts of bone matrix and marrow produce a bone yield comparable to that of cancellous bone.