Demineralized bone matrix (DBM) is a well established osteoinductive bone graft material. It has been mixed with a variety of carriers to adjust to different forms of handling for a variety of applications. The impact of the various carriers on osteoinductivity remains largely unknown. Using an in vitro cell culture assay and in vivo intramuscular implantations into nude rats, the effects of moisture from water-based carriers and the storage temperature on osteoinductivity were studied. In the dry state, DBM can preserve its osteoinductive activity when temperatures reached 65 degrees C, but in the presence of moisture, the activity decreases with incubation time. Nearly 90% of the DBM activity is lost when maintained for 5 weeks at 65 degrees C. This study further indicates that the structure and stability of the collagen network in DBM not only provide a scaffold for osteogenitor cell proliferation and differentiation, but also controls the release rate of osteoinductive growth factors.