The bioactivity and mechanical properties of morcellized allografts and hydroxyapatite (HA) granules were evaluated in a rabbit model. Allografts were replaced by viable trabecular structures within 8 weeks. The yield strength and stiffness of allografts were within normal cancellous bone levels by 3 weeks and were maintained afterward. The amount of newly formed bone around HA granules was comparable to that around allografts. The yield strength and stiffness of HA granules were significantly higher than those of allografts at 3 and 12 weeks. Allografts offer the advantage of being replaced by host-bone without significant deterioration in mechanical properties over the course of remodeling. HA granules can also be used for a bone substitute given their bioactivity in bone conduction and superiority in mechanical properties to allografts.