The present study was undertaken on 80 adult male New Zealand rabbits to assess the effect of free nonvascularized, autologous, periosteum transplants on bone healing in a rabbit fracture model comparable to a tibial fracture with severe soft tissue damage. Comparison was made between transplantation of free autologous periosteal grafts on the anteromedial side of the tibia and nontransplantation on the contralateral tibia (control). We produced a standardized transverse osteotomy of both tibial diaphyses. The medullary cavity was reamed and nailed ; a 1-cm segment of periosteum was excised from either side of the osteotomy. Periosteal and extraosseous ingrowth was prevented at the osteotomy site by a silastic sheet wrapped around two-thirds of the circumference of the tibia. On the silastic-free bone window, in one group we spanned the osteotomy with a free nonvascularized longitudinally-oriented autologous periosteum sewn to the adjacent periosteum proximally and distally. In the second group, the periosteum was placed transversely with a gap between it and the adjacent periosteum proximally and distally. Revascularization of the graft was determined with the colored microsphere technique. Our data suggest that orthotopically-placed autologous nonvascularized periosteum retains its osteogenic potential in a poorly vascularized environment comparable to a tibial fracture with severe soft tissue damage ; the effect is enhanced if the graft is in contact with intact periosteum. Histologically, callus formation after periosteal grafting resembles endochondral and intramembranous ossification.