1Bone grafting is the second most common tissue transplantation procedure worldwide. 2The gold standard for bone grafting is the autograft; however, due to morbidity and limited 3 supply, new alternatives, including allograft and tissue-engineered bone substitutes, are needed 4 to satisfy long-term demand. One of the most desired properties of tissue-engineered bone 5 substitutes is osteoinductivity, defined as the ability to stimulate primitive cells to differentiate 6 into a bone forming lineage. In the current study, we treated porcine bone with a decellularization 7 protocol to produce a bone scaffold. We examined whether the scaffold possessed osteoinductive 8 potential and could be used to create a tissue-engineered bone microenvironment. To test if the 9 bone scaffold was a viable host, pre-osteoblasts were seeded, incubated in vitro, and analyzed for 10 markers of osteogenic differentiation. To assess these properties in vivo, scaffolds with and 11 without pre-osteoblasts pre-seeded were subcutaneously implanted in mice for four weeks. The 12 scaffolds underwent micro-computed tomography (microCT) scanning before implantation. After 13 retrieval, the scaffolds were analyzed for osteogenic differentiation or re-scanned by microCT to 14 assess new bone formation with the subsequent histological assessment. The osteoinductive 15 potential was observed in vitro with similar osteogenic markers being expressed as observed in 16 demineralized bone matrix and significantly greater expression of these markers than controls. 17By microCT, paired t-tests demonstrated significantly increased bone volume:total volume 18 (BV/TV) and trabecular thickness (Tb.Th) after explantation in all groups. Pentachrome staining 19 demonstrated osteogenesis within the scaffold, and angiogenesis in the scaffold was confirmed 20 by CD31 staining for blood vessels. These results demonstrate that porcine bone maintains its 21 osteoinductive properties after the application of a novel decellularization and oxidation protocol. 22Future work must be performed to definitively prove osteogenesis of human mesenchymal stem 23 cells, biocompatibility in large animal models, and osteoinduction/osseointegration in a relevant 24 clinical model in vivo. The ability to create a functional bone microenvironment using 25 decellularized xenografts will impact regenerative medicine, orthopaedic reconstruction, and 26 could be used in the research of multiple diseases. 27 28