Osteogenesis in subcutaneous, cancellous bone isografts in the rat was assessed at 16 days from the uptake of 85Sr. by comparing the uptake in grafts devoid of one or more cellular components, the contribution of each to osteogenesis was estimated. The per cent contribution of each of the osteogenetic elements was: endosteal lining cells together with marrow stroma, 60%; periosteal cells, 30%; free, hemopoietic marrow cells and osteocytes, no significant contribution. These findings are compared with those previously reported for cortical bone isografts and it appears that the rate of osteogenesis is 2.2 times higher in cancellous grafts than in cortical grafts of the same weight, but only 1.7 times higher when grafts of the same volume are compared. Osteogenetic and hemopoietic activities associated with marrow appear to arise from different groups of cells. It is shown how, with iliac bone marrow, these two groups of cells may be separated physically, the hemopoietic cells being removed by means of a jet of saline, and the osteogenetic cells by subsequent enzyme treatment plus a second jet of saline. The osteogenetic and hemopoietic elements were difficult to separate from bone marrow within the femoral diaphysis.