Bone grafting is a type of transplantation used to replace missing bone tissue or stimulate the healing of fractures. This surgical procedure is useful for repairing bone fractures that are extremely complex, pose a significant health risk to the patient, or fail to heal properly, leading to pseudoarthrosis. While some small or acute fractures can heal without bone grafting, the risk is greater for large fractures, such as compound fractures. Additionally, structural or morcellized bone grafting can be used in joint replacement revision surgery when wide osteolysis is present.

Bone generally has the ability to regenerate completely but requires a very small fracture space or some sort of scaffold to do so. Bone grafts may be autologous (bone harvested from the patient's own body, often from the iliac crest), allograft (cadaveric bone usually obtained from a bone bank), or synthetic (often made of hydroxyapatite or other naturally occurring and biocompatible substances) with similar mechanical properties to bone. Most bone grafts are expected to be resorbed and replaced as the natural bone heals over a few months' time.

The principles involved in successful bone grafts include osteoconduction (guiding the reparative growth of the natural bone), osteoinduction (encouraging undifferentiated cells to become active osteoblasts), and osteogenesis (living bone cells in the graft material contribute to bone remodeling). Osteogenesis only occurs with autograft tissue and allograft cellular bone matrices.

A more recent application of bone grafting is its use as an antibiotic carrier. Infected bone is poorly perfused, making it difficult to achieve an appropriate antibiotic concentration at the site of infection when intravenous administration is used, especially for antibiotics with large molecules such as vancomycin. In such cases, impacted morcellized bone allografts (IBG), impregnated with local antibiotics can achieve much higher concentrations of antibiotics locally than the minimum inhibitory concentration (MIC).

Bone grafting is possible because bone tissue, unlike most other tissues, has the ability to regenerate completely if provided the space into which to grow. As native bone grows, it will generally replace the graft material completely, resulting in a fully integrated region of new bone. The biologic mechanisms that provide a rationale for bone grafting are osteoconduction, osteoinduction and osteogenesis.

Osteoconduction is termed as "the property of a material to support tissue ingrowth, osteoprogenitor cell growth, and development for bone formation to occur". In the context of bone grafting it occurs when the bone graft material serves as a scaffold for new bone growth that is perpetuated by the native bone. Osteoblasts from the margin of the defect that is being grafted utilize the bone graft material as a framework upon which to spread and generate new bone. Osteoblasts do not originate from the donor tissue, but through the internal ingrowing of the host's cells. The proper bonding of bioactive chemicals (Beta-Tricalcium Phosphate) in implants used in bone grafting surgery allow the promotion of osteoconductivity in the area of a defect. In the very least, a bone graft material should be osteoconductive by being made up of these bioactive chemicals.

Osteoinduction involves the stimulation of osteoprogenitor cells to differentiate into osteoblasts that then begin new bone formation. The most widely studied type of osteoinductive cell mediators is bone morphogenetic proteins (BMPs). A bone graft material that is osteoconductive and osteoinductive will not only serve as a scaffold for currently existing osteoblasts but will also trigger the formation of new osteoblasts, theoretically promoting faster integration of the graft.^{[citation needed]}

Osteopromotion involves the enhancement of osteoinduction without the possession of osteoinductive properties. For example, enamel matrix derivative has been shown to enhance the osteoinductive effect of demineralized freeze dried bone allograft (DFDBA), but will not stimulate new bone growth alone.