In a subcutaneous implant rat model, Collagraft alone (n=8), Collagraft plus isologous bone marrow (n=8), and marrow alone (n=8) were evaluated. Twelve rats were euthanized at 11 days and 12 at 21 days. Explants were evaluated histologically for evidence of bone formation, and osteogenic activity was determined by an assay for alkaline phosphatase. Histological bone formation was absent in all groups at 11 days. At 21 days, in the Collagraft alone and bone marrow alone groups, no bone induction was noted. In contrast, 21-day specimens from the Collagraft plus bone marrow group showed newly formed bone. Alkaline phosphatase activity was negligible (<0.05 units/mg) in all 11-day specimens. Activity in Collagraft plus bone marrow specimens at 21 days (0.38 units/mg) was significantly higher than any other group (P<.001 for all comparisons). This study demonstrates that Collagraft plus bone marrow is an osteoinductive matrix.