The effect of magnesium deficiency on bone cell differentiation and bone formation was investigated using in vivo matrix-induced endochondral ossification as a test system. Demineralized bone matrix was implanted subcutaneously in young (35-day-old) male Long-Evans rats that had been fed a semisynthetic Mg-deficient diet (50 ppm Mg) for 7 days. Plasma Mg levels were reduced to 25-30% of control values at that time. Control rats were paired the same diet, supplemented to contain 1000 ppm Mg. The implants were harvested 7, 9, 11, 15, and 20 days after implantation and analyzed for Mg and Ca content, 45Ca incorporation, and alkaline phosphatase levels. At each stage, plaques (implants) removed from Mg-deficient rats showed retardation in cartilage and bone differentiation and matrix calcification. Magnesium content was markedly reduced when compared to the control plaques. Histological appearance of the matrix-induced plaques confirmed the retardation in bone development and mineralization suggested by the chemical indicators. Most marked was the virtual absence of bone marrow in 20-day-old plaques in Mg-depleted rats. These data show that bone cell differentiation can occur in a severely Mg-depleted environment, although the onset of mineralization and bone remodeling was delayed and bone marrow differentiation was impaired.