The purpose of the current study was to determine the timely ingrowth of blood vessels associated with demineralized bone matrix (DMB) induced osteogenesis. Critical-size (10 x 5mm), full thickness bony defects in rabbit parietal bone were implanted with DBM. Histological and ultrastructural changes were examined 1, 2, 3, 4, 5, 6, 7 and 14 days later. Neovascularization was assessed by immunohistochemical staining for factor VIII antigen (marker for vascular endothelium) and also confirmed by staining using pan-endothelial antibody (CD31) (a marker for endothelium). Immunohistochemical evaluation revealed a positive staining for CD31 and Factor VIII expressed by endothelial cells by day 3 post grafting. By day 4, small blood vessels were first seen budding from host bed towards the grafted DBM. Ultrastructural identification of cells in the early stages of healing revealed the presence of macrophages. The monocyte-derived macrophage appears to play a central role in the repair process using DBM. Results of this study demonstrated a rapid vascularization during the DBM induced osteogenesis. This rapid vascularization is vital to the healing and bone induction ability of the DBM.