An attempt was made to reproduce in the experimental animal the clinical condition of steroid induced avascular necrosis of bone. There was a decrease in the ability of subchondral osteocytes to metabolize H3 cytidine and an increased amount of cell death as indicated by the number of empty subchondral lacunae. Oil red O stain for intravascular fat demonstrated large accumulations of fat in subchondral vessels. Much of this fat was deformed and was surrounded by reticulin, leading to the conclusion that it was embolic. A study of human material showed intravascular fat and diminished number of osteocytes in patients on systemic steroids who had died without clinical evidence of avascular necrosis. In addition, intravascular fat was demonstrated in avascular femoral heads and humeral heads both from transplant patients and patients receiving steroids for other reasons. The most tenable explanation for this series of events involves steroid-induced fatty liver with subsequent showeres of fatty emboli, which lodge in the subchondral region owing to the microvascular anatomy. Cell death ensues, and the necrotic bone is partially removed by the normal resorptive mechanism, but steroids retard osteogenesis, lead to microfractures, and eventually sequester the involved area.