This study evaluated the tissue reactions to two materials: ceramic hydroxyapatite (CHA), and a composite material of demineralized bone powder (DBP) and CHA (ratio of 4:1) in a collagen vehicle. The materials were tested in a subcutaneous pocket, a mandibular onlay, and in a calvarial onlay model. Specimens were evaluated histologically at 7, 10, 14, and 21 days postimplantation. Ceramic hydroxyapatite, implanted subcutaneously, elicited a fibrous response with minimal inflammation, but did not induce bone formation. In specimens of subcutaneously implanted composite material, induced bone was evident in association with the DBP. In CHA onlay specimens, there was a small amount of reactive bone extending from the host bone into the implant. In composite onlays, bone filled the entire body of the implant. The results of this study indicate that CHA particles were not osteoinductive in heterotopic sites and that osteoconductive ingrowth was minimal in onlays. Bone was induced by DBP even when mixed with CHA particles and implanted in subcutaneous and intraosseous sites. It was concluded that composite implants may provide a means of combining the osteoinductive properties of DBP with the bulk and structural support of osteoconductive CHA particles.