The transformation of mesenchymal tissue, such as muscle, into cartilage and bone can be induced by the recently purified osteoinductive factor, osteogenin, and by its parent substratum, demineralized bone matrix. We investigated the possibility of transforming readily available muscle flaps into vascularized bone grafts of various shapes that could be used as skeletal replacement parts. In a rat experimental model, thigh adductor muscle island flaps were placed inside bivalved silicone rubber molds. Prior to closure of the mold, 18 flaps were injected with osteogenin and coated with demineralized bone matrix. Five flaps served as controls and were injected with the vehicle only, and not coated with demineralized bone matrix. The molds were implanted subcutaneously in the rats' flanks and reopened 10 days later. The control flaps consisted of intact muscle without any evidence of tissue transformation, whereas the flaps treated with osteogenin and demineralized bone matrix were entirely transformed into cancellous bone that matched the exact shape of the mold. Using tissue transformation, we were able to generate in vivo, autogenous, well-perfused bones in the shapes of femoral heads and mandibles.