The origin of the cartilaginous tissue in articular defects after periosteal grafting was studied histologically in 6-month-old rabbits. The grafts were taken from the tibia and transplanted to artificial defects in the femoral articular cartilage. An isolating Nuclepore filter, hindering the penetration of cells, was placed between the graft and the cancellous bone, in order to trace the origin of the proliferating cells. The histological results revealed that the cartilage tissue which proliferated in the defect originated from the periosteal graft and not from the subchondral bone. The effect of the depth of the defect was studied by making a superficial and deep part in the defect. Cartilage tissue was found in both parts of the defect, though there was less in the more superficial defect.