The aim of this study was to determine the biocompatibility of NiTi alloy on bone formation in vivo. For this purpose we used ectopic bone formation assay which goes through all the events of bone formation and calcification. Comparisons were made between Nitinol (NiTi), stainless steel (Stst) and titanium-aluminium (6%)-vanadium (4%) alloy (Ti-6Al-4V), which were implanted for 8 weeks under the fascia of the latissimus dorsi muscle in 3-month-old rats. A light-microscopic examination showed no chronic inflammatory or other pathological findings in the induced ossicle or its capsule. New bone replaced part of the decalcified matrix with mineralized new cartilage and bone. The mineral density was measured with peripheral quantitative computed tomography (pQCT). The total bone mineral density (BMD) values were nearly equal between the control and the NiTi samples, the Stst samples and the Ti-6Al-4V samples had lower BMDs. Digital image analysis was used to measure the combined area of new fibrotic tissue and original implanted bone matrix powder around the implants. There were no significant differences between the implanted materials, although Ti-6Al-4V showed the largest matrix powder areas. The same method was used for measurements of proportional cartilage and new bone areas in the ossicles. NiTi showed the largest cartilage area (p < or = 0.05). Between implant groups the new bone area was largest in NiTi. We conclude that NiTi has good biocompatibility, as its effects on ectopic bone formation are similar to those of Stst, and that the ectopic bone formation assay developed here can be used for biocompatibility studies.