Bone is a complex, highly structured, mechanically active, three-dimensional (3-D) tissue composed of cellular and matrix elements. We previously published a report on in situ collagen gelation using a rotary 3-D culture system (CG-RC system) for the construction of large tissue specimens. The objective of the current study was to evaluate the feasibility of bone tissue engineering using our CG-RC system. Osteoblasts from the calvaria of newborn Wistar rats were cultured in the CG-RC system for up to 3 wk. The engineered 3-D tissues were implanted into the backs of nude mice and calvarial round bone defects in Wistar rats. Cell metabolic activity, mineralization, and bone-related proteins were measured in vitro in the engineered 3-D tissues. Also, the in vivo histological features of the transplanted, engineered 3-D tissues were evaluated in the animal models. We found that metabolic activity increased in the engineered 3-D tissues during cultivation, and that sufficient mineralization occurred during the 3 wk in the CG-RC system in vitro. One mo posttransplantation, the transplants to nude mice remained mineralized and were well invaded by host vasculature. Of particular interest, 2 mo posttransplantation, the transplants into the calvarial bone defects of rats were replaced by new mature bone. Thus, this study shows that large 3-D osseous tissue could be produced in vitro and that the engineered 3-D tissue had in vivo osteoinductive potential when transplanted into ectopic locations and into bone defects. Therefore, this system should be a useful model for bone tissue engineering.