Damage to physes is of serious consequences in children. Currently available treatments are limited and results are unpredictable. In this study, we attempted to treat proximal tibial physeal damage in rabbits with transplanted bioengineered physeal tissue. Resting chondrocytes from the reserve zone of costal cartilages of 6-week-old rabbits were pellet cultured in centrifuge tubes. The pellets were characterized histologically and biochemically with reference to the normal physis. The bioengineered tissue was then transplanted into partially damaged proximal tibial physis. Histological changes and proteoglycan metabolism of the transplants were monitored until 7 weeks posttransplantation. Our results showed that chondrocytes cultured by three-dimensional pellet exhibited cell division and the derived cells arranged in short columns similar to normal physis. They synthesized and deposited cartilaginous matrix and differentiated into hypertrophic chondrocytes marked by increases in cell size and alkaline phosphatase activity. The transplant incorporated well in host tissue with no sign of rejection for up to 7 weeks posttransplantation. A further 3-fold increase in thickness of the transplant within the host was observed. Endochondral ossification was demonstrated at 7 weeks posttransplantation. These results show that the bioengineered physeal tissue may have great potential in clinical management of physeal damage in children.