The effects of 1 hydroxethylidene-1, 1-bisphosphonate (HEBP) on the mineralization of osteoid induced ectopically by a murine, osteosarcoma-derived, bone-inducing substance was examined at the ultrastructural level. Samples of Dunn osteosarcoma were chemically processed, lyophilized into pellets of uniform dimensions and protein content, and implanted into the back muscles of male, 4 week old, ddY mice. In control animals injected intraperitoneally (i.p.) with saline each day for 30 days, the pellets exhibited ectopic cartilage and bone formation in a sequential manner consistent with endochondral ossification. Daily administration of HEBP (30 mg/kg i.p. per day) to animals over the same period produced wide anastomosing strands of osteoid and haematopoietic marrow in the pellets. Electron microscopical examination revealed a tightly packed organization of collagen fibrils with many membrane bounded organelles or matrix vesicles (0.05-0.3 micron diameter) dispersed throughout this nonmineralized matrix. After withdrawal of HEBP, mineralization proceeded initially within matrix vesicles and secondarily by involvement of the surrounding collagen fibrils. In pellets retrieved at 30 days after HEBP withdrawal, most of the matrix had been mineralized and remodeled to reveal thin bony trabeculae and an overall histologic appearance similar to that seen in the control pellets. This model of ectopic bone formation permits clear visualization of the sequence of mineral nucleating events in osteoid in the absence of an established mineralizing front. The results add further support to the hypothesis that matrix vesicles are directly responsible for the initiation of mineralization in bone.