Nonsteroidal anti-inflammatory drugs (NSAIDs), which inhibit cyclooxygenase (COX) activity, reduced pain and are commonly used in patients with skeletal injury. In this article we will also present data to show that selective COX-2 inhibitor delays allograft healing and incorporation. In contrast, local delivery of prostaglandin E2 (PGE2) enhanced bone formation at cortical bone graft junction. A 4-mm mid-diaphyseal segmental femoral defect was created and then repaired by frozen bone allograft of the same size. A 22-gauge metal pin was placed in the intramedullary cavity to stabilize the bone graft. Healing was evaluated weekly by X ray and by a semiquantitative histomorphometric analysis at 5 weeks postsurgery. Celecoxib (25 mg/kg/day) and Ketorolac (4 mg/kg/day) were administered daily for 2 weeks or 5 weeks. PGE2 was infused locally at a dose of 800 nmol/kg per day via osmotic minipump for 4 weeks. Inhibition of cyclooxygenase by daily administration of the Celecoxib or Ketorolac for 5 weeks reduced new bone ingrowth by about 60% (P < 0.05). The percentage of bony bridging in both drug-treated groups was significantly decreased at 5 weeks. Temporal administration of Celecoxib for 2 weeks also significantly reduced bone formation by 45% and withdrawal of the Celecoxib only led to slight recovery of bone formation at the graft side. In contrast to the inhibitory effects of NSAIDS, PGE2 infusion at the cortical bone junction increased bone formation by about twofold. These results demonstrated that COX-2 is essential for bone allograft incorporation. Furthermore, our data support the notion that COX-2-dependent PGE2 produced at the early stage of bone healing is prerequisite for efficient skeletal repair.