Self-setting apatite cement was investigated to evaluate its use as a possible bone substitute in the rat femur. The implant sites were recovered at intervals up 12 weeks postoperatively and investigated by the use of x-ray diffraction, contact microradiography, light and electron microscopy. By x-ray diffraction analysis, the cement placed for at least one day in the medullary canal of rats was found to be completely converted to a set phase of hydroxyapatite resembling the main inorganic phase of bone. In any specimens prepared at 1, 4, 12 weeks after implantation, no appreciable foreign body response was observed in the tissue around the set cement. At four weeks after implantation the set cement was in tight contact with the newly formed bone which appeared to involve osteocytes in lacunae and osteoblastic cells on its surface. At twelve weeks after implantation, the newly formed bone tended to grow into the interior of the set cement. With scanning electron microscopy, the newly formed bone was found to be directly deposited on the set cement. The newly formed bone consisted of fine needle-like crystals. These results strongly suggest that this cement is well tolerated by bone tissue and osteogenesis when used as a bone substitute. The advantage of the present material as a promising bone substitute is that it can be filled in surgical or traumatic bone defect as a slurry or paste.