Background: Despite the introduction of 21st-century surgical and neoadjuvant treatment modalities, survival of patients with osteosarcoma (OS) has not improved in two decades. Advances will depend in part on the development of clinically relevant and reliable animal models. This report describes the engineering and validation of a humanized tissueengineered bone organ (hTEBO) for preclinical research on primary bone tumors in order to minimize false-positive and false-negative results due to interspecies differences in current xenograft models. Methods: Pelvic bone and marrow fragments were harvested from patients during reaming of the acetabulum during hip arthroplasty. HTEBOs were engineered by embedding fragments in a fibrin matrix containing bone morphogenetic protein-7 (BMP-7) and implanted into NOD-scid mice. After 10 weeks of subcutaneous growth, one group of hTEBOs was harvested to analyze the degree of humanization. A second group was injected with human luciferase-labeled OS (Luc-SAOS-2) cells. Tumor growth was followed in vivo with bioluminescence imaging. After 5 weeks, the OS tumors were harvested and analyzed. They were also compared with tumors created via intratibial injection. Results: After 10 weeks of in vivo growth, a new bone organ containing human bone matrix as well as viable and functional human hematopoietic cells developed. Five weeks after injection of Luc-SAOS-2 cells into this humanized bone microenvironment, spontaneous metastatic spread to the lung was evident. Relevant prognostic markers such as vascular endothelial growth factor (VEGF) and periostin were found to be positive in OS tumors grown within the humanized microenvironment but not in tumors created in murine tibial bones. Hypoxia-inducible transcription factor-2a (HIF-2a) was detected only in the humanized OS. Conclusions: We report an in vivo model that contains human bone matrix and marrow components in one organ. BMP-7 made it possible to maintain viable mesenchymal and hematopoietic stem cells and created a bone microenvironment mimicking human physiology.