Regeneration of alveolar bone is essential for periodontal treatment. Recently, cell replacement therapy has been focused on periodontal disease, but the source of the cells that regenerate alveolar bone is still uncertain. Therefore, to clarify the source of these bone-regenerating cells, we transplanted GFP-transgenic rat molars into the subcutaneous tissues of wild-type rats. Five days after transplantation, the tooth was surrounded by connective tissue containing many blood vessels. At 10 days, bone-like tissue was formed in the connective tissue between the branches of the bifurcated root. This hard tissue expanded to almost all of this bifurcation area without osseous ankylosis after 20 days. All osteoblast-like cells in the newly formed matrix were immunopositive for GFP. In addition, these cells and the peripheral cells of the matrix showed intense immunoreactivity for BMP4, Runx2, BSP, and OPN. These results demonstrate that periodontal ligament tissue contains osteoprogenitor cells that have the ability to regenerate alveolar bone. Our model suggests that these regeneration processes might be similar to normal alveolar bone formation.