We assessed the target tissue for the stimulatory effect of prostaglandin E₂ (PGE₂) on bone formation previously observed during fracture healing. PGE₂ was infused into tibial periosteal tissue in the right leg of 7 rabbits and into the anterior tibial muscle in the right leg of 7 other rabbits for 6 weeks. Solvent solution was infused into the left leg. PGE₂ infusion at the periosteum caused the formation of primitive woven bone with large amounts of connective tissue; solvent infusion caused small amounts of normal periosteal bone formation. In the neighboring cortical bone, remodeling was increased after PGE₂ infusion compared to solvent infusion. In the muscle, PGE₂ infusion caused the formation of connective tissue with small amounts of woven bone. Thus, the major effects of PGE₂ infusion at the site of the periosteum was the formation of primitive woven bone and in muscles the formation of connective tissue.