Cortisone treatment of dogs after transplants of autogenous tibial grafts revealed sharply reduced alkaline-phosphatase activity two and four weeks after surgery. Graft incorporation and suitable trabecular formation were not seen until four weeks after transplantation in corticosteroid-treated dogs; the trabeculae of the callus lacked the usual osteoblastic lining. Histologically and grossly, the graft site in cortisone-treated dogs exhibited a retardation in bone healing of two weeks when compared with that in control dogs.