Heterotopic bone can be induced in experimental animals by trauma to the soft tissues, by induction from living cells, or by extracts from bone and teeth. In the first two types, the mechanism of the inductive process is not known, whereas in the latter, a factor isolated from bone matrix induces bone formation. Mesenchymal cells in bone marrow are determined for development into cartilage and bone cells and only an unspecific stimulus, such as trauma or autotransplantation, is sufficient for the development into mature osteogenic tissue. Mesenchymal cells will not differentiate into bone cells unless stimulated by a specific inductive substance, bone morphogenetic protein (BMP). Implanted to a heterotopic site, BMP induces undifferentiated mesenchymal cells into a bone morphogenetic pathway of development, causing heterotopic bone formation. The quantitative inductive response is dependent on the source of the BMP, and the bone formation is also determined by the recruitment of inducible target cells and by the environment at the implantation site. Hence, the environment at the implantation site is of major importance for the amount of bone formed. BMP initiates a cascade of events that is modulated by endocrine and paracrine factors. The heterotopic bone has all the morphologic and biochemical characteristics of orthotopic bone, is subjected to turnover, and even has the intriguing ability to generate the formation of bone marrow. Experimental induction of heterotopic bone has become a most useful method to study osteoneogenesis and has supplied important information on the prerequisites for new bone formation and on the regulation of bone metabolism.