Background/Objective: Despite recent progress in regeneration medicine, the repair of large bone defects due to trauma, inflammation and tumor surgery remains a major clinical challenge. This study was designed to produce large amounts of viable bone graft materials in a novel perfusion bioreactor to promote bone formation. Methods: Cylindrical defects were created bilaterally in the distal femurs of sheep, and titanium implants were inserted. The concentric gap around the implants was randomly filled either with allograft, granules, granules with bone marrow aspirate (BMA) or bioreactor activated granule (BAG). The viable BAG consisted of autologous bone marrow stromal cells (BMSCs) seeded upon porous scaffold granules incubated in a 3D perfusion bioreactor for 2 weeks prior to surgery. 6 weeks after, the bone formation and early implant fixation were assessed by means of micro-CT, histomorphometry, and mechanical test. Results: Microarchitectural analysis revealed that bone volume fraction and trabecular thickness in the allograft were not statistically different than those (combination of new bone and residue of granule) in the other 3 groups. The structure of the allograft group was typically plate-like, while the other 3 groups were combination of plate and rod. Histomorphometry showed that allograft induced significantly more bone and less fibrous tissue in the concentric gap than the other 3 granule groups, while the bone ingrowth to implant porous surface was not different. No significant differences among the groups were found regarding early implant mechanical fixation. Conclusion: In conclusion, despite nice bone formation and implant fixation in all groups, bioreactor activated graft material did not convincingly induce early implant fixation similar to allograft, and neither bioreactor nor by adding BMA credited additional benefit for bone formation in this model.