Specimens of twelve osteosarcomas, five chondrosarcomas, one giant-cell tumor, and five extraskeletal soft-tissue sarcomas were transplanted into male athymic nude (nu/nu) mice. Survival of the transplant was determined by the volume-doubling time and the sex chromatin of the tumor cells obtained from two female patients. By these criteria and the similarity of the histological composition of the original tumor and the transplant, survival occurred in four of twelve osteosarcomas and four of five chondrosarcomas. Without any local infiltration of lymphocytes or plasma cells, or other evidence of cell-mediated immunity, the surviving tumors regressed by the fourth week after the operation. Transformed osteoblasts and osteoprogenitor cells were replaced by fibrous connective tissue or fibrogenic tumor-tissue cells. Osteocytes degenerated and disappeared from the lacunae. The one giant-cell tumor transplant survived, growing very slowly, but by the end of the first week after transplantation whorls of mononucleated cells appeared in sites previously occupied by multinucleated cells. Transplants of leiomyosarcoma, liposarcoma, and synovioma (one tumor of each) degenerated. One of two fibrosarcomas survived transplantation. The most striking reaction of the mouse host bed was to encompass six of twelve osteosarcomas and four of five chondrosarcomas in deposits of normal living cartilage, bone, and bone marrow. The incidence of new bone inducedy by living transplants was only slightly greater than by implants of freeze-dried killed osteosarcoma tissue. Not one of five extraskeletal sarcomas, living or dead, induced bone formation. These observations suggest that an osteoinductive agent is transmitted by some osteosarcomas and chondrosarcomas. This agent initiates differentiation of host mesenchymal cells into normal non-tumorous cartilage and bone, which later colonized by bone marrow. Clinical Relevance: Our observations present experimental evidence of the origin of the envelope of normal non-tumorous bone that may surround tumorous bone. In 1926, Phemister recognized the clinical significane of this envelope as a pitfall in the differential diagnosis of malignant bone tumors, chondrosarcoma, myositis ossificans circumscripta, and other neoplasms. He emphasized the importance of examining the entire specimen for the distribution of deposits of tumorous and normal bone. The induction of normal bone formation in the host bed surrounding transplants of osteosarcomas and some chondrosarcomas (but not transplants of fibrosarcoma, liposarcoma, or leiomyosarcoma) is evidence of a specific tumor-cell characteristic. Thus, the bone inductive response is not an unspecific reaction to injury from expansion or of tumor growth but a biological response to tumor-cell products. Transplants of human malignant tumors growing in the thymus-deficient mouse can be treated by combinations of radiation, amputation, and new chemotherapeutic agents...