We assessed the target tissue for the stimulatory effect of prostaglandin E2 (PGE2) on bone formation previously observed during fracture healing. PGE2 was infused into tibial periosteal tissue in the right leg of 7 rabbits and into the anterior tibial muscle in the right leg of 7 other rabbits for 6 weeks. Solvent solution was infused into the left leg. PGE2 infusion at the periosteum caused the formation of primitive woven bone with large amounts of connective tissue; solvent infusion caused small amounts of normal periosteal bone formation. In the neighboring cortical bone, remodeling was increased after PGE2 infusion compared to solvent infusion. In the muscle, PGE2 infusion caused the formation of connective tissue with small amounts of woven bone. Thus, the major effects of PGE2 infusion at the site of the periosteum was the formation of primitive woven bone and in muscles the formation of connective tissue.