Repair of cortical bone was studied in 2.4-millimeter-diameter mid-diaphyseal femoral and tibial defects in young New Zealand White rabbits using light microscopy, transmission electron microscopy, and histomorphometry. The initial source of repair tissue is the marrow. Vessels grow into the defect, accompanied by undifferentiated mesenchymal cells. Woven bone is synthesized initially at the periphery of the defect on pre-existing cortex. Differentiating mesenchymal osteoblasts surround themselves with osteoid in a woven conformation. Once a scaffold has formed, surface osteoblasts align themselves in a regular array on the woven matrix surface and synthesize osteoid in a lamellar conformation. The long axes of the repair vessels, lamellae, and osteocyte lacunae are perpendicular to the long axis of the bone. Polarized-light microscopy showed maintenance of this pattern at six, eight, and twelve weeks, even when the defect was filled with lamellar bone. Remodeling is performed slowly by osteoclast cutting cones over a period of several months. The lacunar-canalicular system is clearly demonstrated in plastic-embedded, toluidine blue-stained sections. A canaliculus passes into or away from a lacuna every 1.9 micrometers over the entire osteocyte perimeter. Undifferentiated mesenchymal cells have no processes, as seen by transmission electron microscopy, but soon sprout a florid array of processes as differentiation to early mesenchymal osteoblasts proceeds. Osteoblast and osteocyte cell processes are packed with intermediate filaments that are continuous with those in the cell bodies. Intercellular gap junctions are seen between surface osteoblasts, between osteoblasts and underlying osteocytes, and between osteocyte cell processes in the canaliculi.