The mechanism of bone induction and bone healing by human osteosarcoma cell extracts. Saos-2 cultured human osteosarcoma cells contain an extractable bone inducing agent that can induce heterotopic bone in the muscle of Nu/Nu mice. A semipurified GuHCl extract of Saos-2 cells also can promote healing and complete bony union in otherwise non-healing surgically induced defects of rat femur. Northern blot analyses indicate expression of mRNAs for bone morphogenetic proteins (BMP)-1, 2, 3, 4, 6 and transforming growth factor beta (TGF beta) in Saos-2 cells, and BMP-2, 3, 4, 5, 7 and TGF beta in nonosteoinductive U20S human osteosarcoma cells. Saos-2 cells exceeded U20S cells in expression levels of BMP-1, 3, 4 and TGF beta, whereas U20S cells expressed higher levels of BMP-2, 6 and also expressed trace amounts of BMP-5 and 7 not seen in Saos-2 cells. The authors hypothesize that Saos-2 cells contain an optimal admixture of known bone growth factors plus possible other unknown components that, acting alone or in combination with bone morphogenetic protein and/or TGF beta, can induce bone. Although bone inducing agent-induced heterotopic bones have half lives of only a few weeks, the reparative bone induced by bone inducing agent in femoral defects gives every indication of being permanent and self-sustaining. This suggests a fundamental difference between heterotopic and orthotopic osteoprogenitor cells with those involved in orthotopic bone repair more closely resembling the committed or determined osteoprogenitor cells of marrow as described by Friedenstein.