Histologic grade is an important determinant in clinical outcome of human osteosarcoma (OS). In this study, the histologic characteristics of primary and metastatic canine OS were evaluated using a new classification system. Histologic characteristics were classified in 166 primary and 34 metastatic canine OS. Prognostic variables for clinical outcome were determined using multivariate analysis. Most OS were histologically characterized by severe to extreme cellular pleomorphism, a variable number of mitoses, small to moderate amounts of matrix, a high percentage of tumor cells, and minimal to moderate amounts of necrosis. Tumor invasion into vessels was present in 117/152 (71%) tumors, and 12/50 (24%) of the regional lymph nodes had evidence of metastasis. Classification of the 166 tumors resulted in seven (4%) grade 1, 34 (21%) grade II, and 125 (75%) grade III OS. In the multivariate analysis, histologic grade III OS and elevated pretreatment plasma alkaline phosphatase (AP) levels were independent predictors of clinical outcome. Dogs with high-grade tumors and elevated AP should be carefully evaluated for the presence of metastatic disease before starting adjunctive therapy protocols.