Gamma irradiation from Cobalt 60 sources has been used to terminally sterilize bone allografts for many years. Gamma radiation adversely affects the mechanical and biological properties of bone allografts by degrading the collagen in bone matrix. Specifically, gamma rays split polypeptide chains. In wet specimens irradiation causes release of free radicals via radiolysis of water molecules that induces cross-linking reactions in collagen molecules. These effects are dose dependent and give rise to a dose-dependent decrease in mechanical properties of allograft bone when gamma dose is increased above 25 kGy for cortical bone or 60 kGy for cancellous bone. But at doses between 0 and 25 kGy (standard dose), a clear relationship between gamma dose and mechanical properties has yet to be established. In addition, the effects of gamma radiation on graft remodelling have not been intensively investigated. There is evidence that the activity of osteoclasts is reduced when they are cultured onto irradiated bone slices, that peroxidation of marrow fat increases apoptosis of osteoblasts; and that bacterial products remain after irradiation and induce inflammatory bone resorption following macrophage activation. These effects need considerably more investigation to establish their relevance to clinical outcomes. International consensus on an optimum dose of radiation has not been achieved due to a wide range of confounding variables and individual decisions by tissue banks. This has resulted in the application of doses ranging from 15 to 35 kGy. Here, we provide a critical review on the effects of gamma irradiation on the mechanical and biological properties of allograft bone.