The success of purification of bone morphogenetic protein (BMP) from bone matrix, which can induce differentiation of undifferentiated mesenchymal cells to cartilage and bone cells, is a great advance in the fields of orthopaedic surgery, especially in the treatment of nonunion and bone defect. Recently clinical trials on the treatment of recalcitrant femoral & tibial nonunion using human BMP are reported in many articles. We have extracted the porcine bone morphogenetic protein (pBMP) from the matrix of porcine cortex by differential precipitation technique using various concentration of Urea and GuHCl, and implanted it into the mouse thigh or abdominal muscle pouch. The results were as follows: 1. Molecular weight of pBMP was about 19,000-20,000. 2. After 1 week of implantation, the recruit and proliferation of mesenchymal cells were noted. 3. After 2 weeks, we observed the chondroid tissue at the margin of the pBMP. 4. After 3 weeks, new bone formation with osteoid and osteoblast was noted. We observed gradual transformation of undifferentiated mesenchymal cells into active chondroblasts and osteoblasts and finally into new bone tissue.