A new method of biological repair of osteochondral defects is presented. An osteochondral defect in the rabbit knee was reconstructed with an autogenous callo-osseous graft made of a superficial sheet of medullary fracture callus attached to a base of cancellous bone. The reparative tissues were evaluated for 24 weeks by histology, analysis of uronic acid contents, and immunohistochemical staining of collagen constituents. The callo-osseous graft provided significantly faster and better repair of the articular surface than an untreated defect or a callo-osseous graft in which the cells had been devitalized by irradiation prior to transplantation. The results indicate that the callo-osseous graft contributes to the repair process via providing both favorable extracellular matrices and pluripotential mesenchymal cells.