Histologic and histochemical studies were made upon the collagen and ground substance of the callus and diaphyseal bone at the fracture site in the tibia of rabbits. The main findings were as follows: 1. It was found that the acid mucopolysaccharides were most abundant in the cartilagenous callus, moderate in the newly formed bone trabeculae (fiber bone) and very scanty in the diaphyseal bone and the compact bone after remodelling of the fiber bone, being found only in the wall of lacunae, around the Haversian canals and at the cement lines. 2. In the ground substance of newly formed bone callus and cartilagenous callus, a PAS positive substance was found. The PAS reaction did not run parallelly with the positive reactions for acid mucopolysaccharides in these calluses. It was assumed that there was another mucopolysaccharide present, probably a neutral mucopolysaccharide. 3. During the process of remodelling of fiber bone callus into compact bone, the collagen, acid mucopolysaccharides and PAS positive substance were closely bound together, as evidenced by the disappearance of the positive staining reactions previously found in these components. 4. The matrix of the necrotic ends of the bone fragments and pieces of necrotic bone between the fracture ends were often enveloped and actually invaded by the newly formed bone. Beside osteoclastic activity, this may be a was one way of removal of the necrotic bone. The mechanism needs further clarification.