This is an experimental study on the potential of revascularized periosteal allografts for repair of bony defects. Beijing long-eared white rabbits were used as donors and immunologically incompatible Chinchilla rabbits were used as recipients. The periosteum was stripped off from the femurs of the 6 donor rabbits and transplanted to bony defects of 1.2 cm over the radius of the 12 recipients using microsurgical anastomoses of the blood vessels. In the control group of 8 rabbits the same radial bony defects were produced without the transplantation of periosteal grafts. Immunosuppressants were administered after surgery. The animals were observed for 4 months using a series of radiography, histomorphology, fluorochrome labelling and electron microscopy. Results revealed no bony healing of the defects in the control group, but 9 of the 12 defects healed in the experimental group. The results indicated revascularized periosteal allografts were able to form new bone and heal the 1.2 cm radial bone defect in rabbits.