Implantation of demineralized bone matrix results in local bone induction. Bone induction is a sequential biological chain reaction that consists of chemotaxis and proliferation of mesenchymal cells and differentiation of bone. Osteogenin, a bone morphogenetic protein has been purified and the amino acid sequence determined. Recently a family of bone morphogenetic proteins have been cloned and expressed by recombinant DNA technology. The availability of growth and morphogenetic factors will permit the rational design of new bone. The challenge for the biomechanical engineer is to attain mechanically optimal and functionally adaptive new bone for various skeletal prostheses. We are on the threshold for fabrication of new bone based on sound architectural design principles of tissue engineering based on cellular and molecular biology of growth and differentiation factors.