Using a genetically defined rat model for the heterotopic transplantation of a vascularized knee in the rat, histological and histochemical studies of acute rejection in vascularized allografts of bone were carried out. The graft consisted of the knee joint with the distal end of the femur, the proximal part of the tibia, the cartilaginous growth plates, the articular cartilage, and a minimum cuff of muscle, which was transferred to a location under the abdominal skin. A total of 160 transplants, including vascularized and non-vascularized isografts, vascularized and non-vascularized allografts that were transplanted across a strong histocompatibility barrier, and vascularized allografts of bone that were transplanted across a weak histocompatibility barrier, were studied by light microscopy at intervals for as long as twelve weeks after transplantation. Vascularized allografts of bone that were transplanted across a strong histocompatibility barrier showed evidence of rapid rejection, similar to that after transplantation of allografts of visceral organs. This was manifested at one week by necrosis of osteocytes, cessation of microcirculatory flow, massive extravasation of red cells, and deposition of fibrin in the marrow. The large vessels demonstrated changes that were characteristic of vascular rejection. Allografts that were transplanted across a weak histocompatibility barrier showed a more gradual, less intense process of rejection that allowed observation of the evolution of the process. In these grafts, the osteoblasts and marrow in the primary spongiosa of the metaphysis were early targets of rejection, as indicated by necrosis of osteoblasts, extravasation of red blood cells, and deposition of fibrin in the marrow spaces. Loss of osteoblasts from the surfaces of osteoid as well as from bone on spicules of calcified cartilage resulted in the cessation of new-bone formation. Calcification of the longitudinal septa between the lowermost hypertrophic chondrocytes was decreased. However, the proliferation and maturation of chondrocytes in the zone of proliferating chondrocytes and in the upper hypertrophic zone continued and resulted in the formation of a thickened growth plate. The loss of osteocytes in other areas of the graft occurred later and only in the areas where the microcirculation had been lost. These data suggest that ischemic damage, which is probably secondary to an immune-related vascular compromise, is a significant factor in the failure of grafts. In the grafts that were transplanted across a weak histocompatibility barrier, the growth of new bone and revascularization by the host occurred by twelve weeks.