To clarify the mechanism of osteoinduction by recombinant human bone morphogenetic protein-2 (rhBMP-2), we examined the time-course localization of bone morphogenetic proteins (BMPs) immunostained by an anti-BMP-2 monoclonal antibody after implantation of pellets consisting of rhBMP-2 and collagen in rat calf muscle pouch. On day 3 after implantation, BMP was detected in the entire lump, and the intensity of staining for BMP around the implant on day 7 was weaker than that on day 3. The staining for BMP decreased with time and the region of staining for BMP remained more centralized in the implant. On day 10 after implantation, BMP was observed in part of the newly induced cartilage, especially around chondrocytes. On day 14 after implantation, BMP was localized in the newly induced woven bone. On day 21, BMP staining was found in osteoblasts at the surface of the newly induced bone. Especially, the staining for BMP decreased from day 10 to day 21. These results indicate that the woven bone was replaced with mature lamellar bone from day 14 to day 21. The present findings suggest that rhBMP-2 plays an important role in osteoinduction, especially at the early stage.