In order to understand how biomaterials influence bone formation in vivo, it is necessary to examine cellular response to materials in the context of wound healing. Four interrelated properties of biomaterials (chemical composition, surface energy, surface roughness, and surface topography) affect mesenchymal cells in vitro. Attachment, proliferation, metabolism, matrix synthesis, and differentiation of osteoblast-like cell lines and primary chondrocytes are sensitive to one or more of these properties. The nature of the response depends on cell maturation state. Rarely do differentiated osteoblasts or chondrocytes see a material prior to its modification by biological fluids, immune cells and less differentiated mesenchymal cells in vivo. Studies using the rat marrow ablation model of endosteal wound healing indicate that ability of osteoblasts to synthesize and calcify their extracellular matrix is affected by the local presence of the material. Changes in the morphology and biochemistry of matrix vesicles, extracellular organelles associated with matrix maturation and calcification, seen in normal endosteal healing, are altered by implants. Moreover, the material exerts a systemic effect on endosteal healing as well. This may be due to local effects on growth factor production and secretion into the circulation, as well as to the fact that the implant may serve as a bioreactor.