The purpose of this study was to compare the biological response to two bone substitute materials, hydroxyapatite cement (HAC) and demineralized bone (DMB), when placed in canine cranial bone. The implants were surgically positioned in 15 mm diameter defects created in the parietal plate, harvested en bloc at 3 months (m) and 6m postop, and fixed in 70% ethyl alcohol to preserve the xylenol orange bone label. Half of each implant site was processed into paraffin and the other half into Spurr plastic resin. In order to evaluate the osseoinductive properties of DMB, implants were also surgically placed in the rectus femorous muscle, harvested en bloc at 3m post op, fixed in 0.1 M Na phosphate buffer, pH 7.2, decalcified in 5% EDTA, pH 7.2, and embedded in plastic. All implants were evaluated with light microscopy (LM), radiography, energy-dispersive spectroscopy (EDS), and transmission electron microscopy (TEM). Tissue for LM was routinely decalcified with SFFA, embedded in paraffin, sectioned, stained with hematoxylin/eosin, and viewed with a Zeiss transmitted-light photomicroscope [Figs. 1, 2, 5].