A full-thickness articular-cartilage defect was created in the medial femoral condyles of 32 adult rabbits. The defects were filled with demineralized bone or a composite of demineralized bone and perichondrium. Results of cartilage repair were assessed after 12 weeks of implantation. We conclude that demineralized bone matrix used as a subchondral matrix in a cartilage repair model 1) stimulates and induces subchondral bone ingrowth, 2) provides a surface on which cartilage repair can proceed, and 3) can be utilized as a platform on which perichondrium can be fixed to provide a cellular source for cartilage repair. Repair tissue that developed from perichondrium was thicker, more closely resembled normal articular cartilage, and was of a less fibrous nature than the repair tissue that developed de novo on the demineralized bone matrix.