Summary Implantation of demineralized tooth matrix in subcutaneous sites results in new bone formation locally. The osteoinductive activity of the tooth matrix was dissociatively extracted in 4.0 M guanidine hydrochloride and the residue was devoid of biologic activity. The bone inductive protein, osteogenin, was partially purified by heparin affinity chromatography. The heparin binding fraction initiated the bone differentiation cascade when implanted with guanidine extracted, inactive bone or tooth matrices. These results imply a cooperative interaction between the soluble osteogenin and collagenous substratum in bone induction.