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Autograft, allograft, and synthetic bone graft substitute materials play an important role in reconstructive orthopaedic surgery, and understanding the biologic effects of these materials is necessary for optimum use. Although vascularized and cancellous autograft show optimum skeletal incorporation, host morbidity limits autograft availability. Experimental studies have confirmed an immune response to allograft bone, but the clinical significance of this response in humans still is unclear. Small amounts of cancellous allograft in humans usually are remodeled completely; large allografts become incorporated by limited, surface intramembranous bone formation suggesting that these graft are primarily osteoconductive. Several synthetic skeletal substitute materials also are osteoconductive, and may show remodeling characteristics similar to allograft. Demineralized bone matrix and some isolated or synthetic proteins can induce endochondral bone formation, and therefore are osteoinductive. The extent and distribution of remodeling of bone graft materials are influenced by many factors, including the quality of the host site and the local mechanical environment (strain). Graft materials are likely to become more specialized for use in specific clinical applications, and composite preparations may soon provide bone graft materials with efficacy that equals or exceeds that of autogenous grafts.