The purpose of the present study was to examine the process of bone formation in the regenerating cranial appendages of roe deer (Capreolus capreolus) and fallow deer (Dama dama) during the early postcasting period. After the antlers are cast, osteoclastic and osteoblastic activities lead to a smoothing of the pedicle's separation surface, a strengthening of the pedicle bone, and a partial restoration of the distal pedicle portion that was lost along with the cast antler. Initially, bone formation occurs by intramembranous ossification, but early during the regeneration process cartilage is formed at the tips of the cranial appendages, and is subsequently replaced by bone in a process of endochodral ossification. Shortly after the antlers are cast, the cambium layer of the periosteum in the distal pedicle is markedly enlarged, which suggests that the periosteum serves as a cell source for the bone-forming tissue covering the exposed pedicle bone. The histological findings of our study are consistent with the view that the bony component of the regenerating cranial appendages of deer is largely derived from the pedicle periosteum. Based on findings in other bone systems, we speculate that stem cells that can undergo both osteogenic and chondrogenic differentiation are present in the pedicle periosteum. The early onset of chondrogenesis in the regeneration process is regarded as an adaptation to the necessity of producing a huge volume of bone within a short period. This parallels the situation in other cases of chondrogenesis in membrane bones. Anat Rec Part A 273A: 741-751, 2003.