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Calcium sulfate, plaster of Paris, has a long clinical history for use as a bone graft substitute in various skeletal sites. The current authors examined the in vivo response of calcium sulfate pellets alone or in combination with autogenous bone graft in a bilateral critical-size distal femoral cancellous defect in an adult sheep model. New thick bone formation was seen in defects filled with calcium sulfate pellets alone. Increased immunostaining for bone morphogenetic protein-2, bone morphogenetic protein-7, transforming growth factor-β, and platelet derived growth factor was seen in defects filled with calcium sulfate pellets alone and in combination with autograft. The local acidity during calcium sulfate resorption is proposed as a possible in vivo mechanism for this type of material.