Bone morphogenetic proteins (BMPs) are widely used as bone graft substitutes in spinal fusion, but are associated with numerous adverse effects. The growth factor Nel-like molecule-1 (Nell-1) is mechanistically distinct from BMPs and can minimize complications associated with BMP therapies. This study evaluates the efficacy of Nell-1 combined with demineralized bone matrix (DBM) as a novel bone graft material for interbody spine fusion using sheep, a phylogenetically advanced animal with biomechanical similarities to human spine. Nell-1+sheep DBM or Nell-1+heat-inactivated DBM (inDBM) (to determine the osteogenic effect of residual growth factors in DBM) were implanted in surgical sites as follows: (1) DBM only (control) (n=8); (2) DBM+0.3 mg/mL Nell-1 (n=8); (3) DBM+0.6 mg/mL Nell-1 (n=8); (4) inDBM only (control) (n=4); (5) inDBM+0.3 mg/mL Nell-1 (n=4); (6) inDBM+0.6 mg/mL Nell-1 (n=4). Fusion was assessed by computed tomography, microcomputed tomography, and histology. One hundred percent fusion was achieved by 3 months in the DBM+0.6 mg/mL Nell-1 group and by 4 months in the inDBM+0.6 mg/mL Nell-1 group; bone volume and mineral density were increased by 58% and 47%, respectively. These fusion rates are comparable to published reports on BMP-2 or autograft bone efficacy in sheep. Nell-1 is an independently potent osteogenic molecule that is efficacious and easily applied when combined with DBM.