Implantation of rat demineralized bone matrix into intramuscular pouches has been shown to cause a complex cellular transition of mesenchymal-type cells into well developed mature bone. Demineralized bone matrix was surgically implanted into rat muscle pouches and removed at various intervals between 7 and 28 days. Histological sections of the implants revealed bone formation by endochondral ossification and appositional bone growth. Biochemical analysis of collagen synthesis demonstrated the following: (1) synthesis of type X collagen, a collagen produced by hypertrophic chondrocytes in the growth plate and in fracture callus. (2) Synthesis of a collagenase-sensitive 17k protein which seems to increase in the early stages of bone induction. Pulse chase analysis indicates that 17k is not a degradation product of another protein and appears to be synthesized without a large Mr precursor. The 17k component contains one or more collagenous domains that are partially resistant to proteolysis with pepsin. Our results confirm the appearance of a cartilage intermediate during demineralized bone matrix induced ossification and implicate the existence of proteins which may be useful markers in future studies on matrix mineralization and ossification.