Impaction allograft is an established method of securing initial stability of an implant in arthroplasty. Subsequent bone integration can be prolonged, and the volume of allograft may not be maintained. Intermittent administration of parathyroid hormone has an anabolic effect on bone and may therefore improve integration of an implant. Using a canine implant model we tested the hypothesis that administration of parathyroid hormone may improve osseointegration of implants surrounded by bone graft. In 20 dogs a cylindrical porous-coated titanium alloy implant was inserted into normal cancellous bone in the proximal humerus and surrounded by a circumferential gap of 2.5 mm. Morsellised allograft was impacted around the implant. Half of the animals were given daily injections of human parathyroid hormone (1-34) 5 μg/kg for four weeks and half received control injections. The two groups were compared by mechanical testing and histomorphometry. We observed a significant increase in new bone formation within the bone graft in the parathyroid hormone group. There were no significant differences in the volume of allograft, bone-implant contact or in the mechanical parameters. These findings suggest that parathyroid hormone improves new bone formation in impacted morsellised allograft around an implant and retains the graft volume without significant resorption. Fixation of the implant was neither improved nor compromised at the final follow-up of four weeks.