Implantation of decalcified bone matrix in rodents induces the formation of new cartilage and bone by responding cells. Extraction of the bone matrix with high ionic strength solutions, followed by solubilization of part of the extract in isotonic salt solution, yielded material which stimulated glycosaminoglycan (GAG) synthesis by monolayers of fibroblastic cells. Bone is greatly enriched in this stimulatory activity compared to other connective tissues. However, fibroblastic cells from different sources respond to the stimulatory effect of low concentrations of the solubilized material. Kinetic studies of the GAG synthesized and secreted by the cultured cells revealed that a major stimulation of GAG secretion occurred at the cell surface as an early event following stimulation with the bone matrix extract. GAG accumulation in the culture medium occurs at a greater rate in cultures that have been stimulated with the bone matrix extract than in controls.