Demineralized bone matrix contains osteoinductive factors and stimulates filling of gaps and defects with bone; however, it is difficult to handle by itself and various preparations have been tested. Demineralized bone matrix with a gel consistency now is available for clinical use. We studied, in a femoral segment defect in the rat, the effects of rat demineralized bone matrix gel with and without a ceramic substratum. This preparation is analogous to the human demineralized bone matrix in the same carrier, used clinically for humans. One hundred adult male Fischer rats were divided into 10 experimental groups. Independent variables included the presence or absence of hydroxyapatite ceramic cylinders, the presence of demineralized bone matrix in carrier or carrier alone (glycerol), and the duration of observation (1, 2, and 4 months). Defects filled with the gel alone had significantly higher radiographic scores for host-graft union at 4 months compared with ceramic with the gel, ceramic alone, or carrier alone. Demineralized bone matrix gel significantly increased the total histologic score for host-graft union, whether ceramic was present or not, and a three-way interaction occurred among ceramic, the gel, and time. Demineralized bone matrix gel was an effective inducer of bone formation in this model. An additional substratum was not required; in fact, significantly more bone was formed in the absence of the ceramic cylinder. Neither the gel nor the ceramic were impediments to revascularization of the defect. Host-graft union was enhanced by demineralized bone matrix gel but not by the ceramic cylinder.