We purified a factor that induces bone formation greater than 300,000-fold from guanidinium chloride extracts of demineralized bone. Fifty nanograms of highly purified protein was active in an in vivo cartilage and bone-formation assay. The activity resided in a single gel band, corresponding to a molecular mass of approximately 30 kDa, which yielded proteins of 30, 18, and 16 kDa on reduction. The partial amino acid sequence obtained from these proteins confirmed our identification of specific factors that induce new bone formation in vivo.