Samples of demineralized bone matrix (DBM) were exposed to graduated doses of radiation (1-15 Megarad) (Mrad) utilizing a linear accelerator and then implanted into the thoracic region of Long-Evans rats. Subcutaneous implantation of DBM into allogenic rats induces endochondral bone. In response to matrix implantation, a cascade of events ensues; mesenchymal cell proliferation on day 3 postimplantation, chondrogenesis on day 7, calcification of the cartilagenous matrix and chondrolysis on day 9, and osteogenesis on day 11 resulting in formation of an ossicle containing active hemopoietic tissue. Bone formation was assessed by measuring alkaline phosphatase activity, the rate of mineralization was determined by measuring 45Ca incorporation to bone mineral, and 40Ca content measured the extent of mineralization; acid phosphatase activity was used as a parameter for bone resorption. The dose of radiation (2.5 Mrad) currently used by bone banks for sterilization of bone tissue did not destroy the bone induction properties of DBM. Furthermore, radiation of 3-5 Mrad even enhanced bone induction, insofar as it produced more bone at the same interval of time than was obtained from unirradiated control samples. None of the radiation doses used in these experiments abolished bone induction, although the response induced by matrix irradiated with doses higher than 5 Mrad was delayed.