Objective: To determine the ability of a novel bovine cancellous bone xenoimplant to act as an osteoconductive graft in an ovine femoral defect model. An autograft harvested from the xenoimplant site was placed in a contralateral limb defect for comparison. Material and methods: The xenoimplant used had been rendered immunologically inert by a novel defatting and deproteinating process. Following surgical implantation of cores into condylar cancellous bone defects, fluorochrome labels were administered to 12 sheep at 2 1/2, 4 1/2 and 8 weeks. Incorporation of the xenoimplants and autografts into the host bone was compared radiographically and histomorphometrically at 10 weeks. Results: Radiographically, the degree of osteointegration was comparable. Histomorphometric data, consisting of labelled surface (LS) estimates, confirmed osteoconductive properties of both the xenoimplants and autografts. Remodelling activity was greatest in the xenoimplants at 2 1/2, weeks. At 4 1/2 weeks, there was more activity in the autograft, but by 8 weeks they were performing similarly. Xenoimplant-LS estimates were comparable or greater than those of the autograft at all times. Conclusions: Processed bovine cancellous bone xenoimplants were osteoconductive in this model and show promise for development as a biomaterial in human and veterinary orthopaedic surgery.