The effect of estrogen deficiency on matrix-induced bone formation was investigated. Female rats were ovariectomized and given demineralized bone matrix (DBM) intramuscularly 3 weeks before termination. The DBM was taken from previously ovariectomized and from sham-operated on rats. The animals were killed at various times after ovariectomy (6-27 weeks). Implants were processed undemineralized for histologic and biochemical studies. Normal DBM implanted in ovariectomized or normal rats induced extensive bone formation 6 weeks postovariectomy. The amount of newly formed bone decreased with the age of host rats. Bone matrix taken from ovariectomized rats was incompletely resorbed in both ovariectomized and normal hosts, therefore reducing the extent of osteogenesis and bone-marrow formation. Instead, chondrogenesis was intensive, but delayed. The calcium, magnesium, and zinc contents were decreased in implants taken from ovariectomized rats when compared with implants taken from normal animals. Normal osteoinduction with DBM taken from normal rats and implanted in ovariectomized rats and the absence of osteogenesis with DBM taken from ovariectomized rats indicate that an estrogen-deficient environment is not crucial for altered matrix-induced endochondral bone formation in ovariectomized rats. An altered composition of matrix from ovariectomized rats and a subsequent abnormality in the cell-matrix interaction should be considered responsible.