The Masquelet technique depends on pre-development of a foreign-body membrane to support bone regeneration with grafts over three times larger than the traditional maximum. To date, the procedure has always used spacers made of bone cement, which is the polymer polymethyl methacrylate (PMMA), to induce the foreign-body membrane. This study sought to compare (i) morphology, factor expression, and cellularity in membranes formed by PMMA, titanium, and polyvinyl alcohol sponge (PVA) spacers in the Masquelet milieu and (ii) subsequent bone regeneration in the same groups. Ten-week-old, male Sprague-Dawley rats were given an externally stabilized, 6 mm femur defect, and a pre-made spacer of PMMA, titanium, or PVA was implanted. All animals were given 4 weeks to form a membrane, and those receiving an isograft were given 10 weeks post-implantation to union. All samples were scanned with microCT to measure phase 1 and phase 2 bone formation. Membrane samples were processed for histology to measure membrane morphology, cellularity, and expression of the factors BMP2, TGFβ, VEGF, and IL6. PMMA and titanium spacers created almost identical membranes and phase 1 bone. PVA spacers were uniformly infiltrated with tissue and cells and did not form a distinct membrane. There were no quantitative differences in phase 2 bone formation. However, PMMA induced membranes supported functional union in 6 of 7 samples while a majority of titanium and PVA groups failed to achieve the same. Spacer material can alter the membrane enough to disrupt phase 2 bone formation. The membrane's role in bone regeneration is likely more than just as a physical barrier. © 2018 Orthopaedic Research Society. Published by Wiley Periodicals, Inc. J Orthop Res.