We investigated predictive factors for local recurrence in 540 patients with non-metastatic osteosarcoma of the extremity treated with surgery and neoadjuvant chemotherapy, between March 1983 and October 1994. The median follow-up was 7.5 (2.5-15) years. Local recurrences developed in 31 (6%) patients after a median time of 2 (0.5-7) years. Local recurrence did not correlate with patients' age and sex, histologic subtype, site and tumor volume, presence of pathologic fracture, chemotherapy regimen and type of surgery. Local recurrence-free survival (LRFS) correlated with the quality of surgical margins and response to chemotherapy: the 7-year LRFS was 97% after adequate surgical margins and 71% after inadequate surgical margins (p < 0.0001), and was 95% in good responders and 90% in poor responders (p = 0.001). Only 1 of 31 patients with local recurrence was free of disease 15 months after the last treatment, 3 were alive with uncontrolled disease and 27 died. This post-relapse outcome is significantly worse than in patients who relapsed with metastases only (25% free of disease, 0.5-9 years after the last treatment). We conclude that, in osteosarcoma of the extremity, limb-salvage procedures should be planned only when the preoperative staging indicates that it is possible to achieve adequate surgical margins. If the pathologic examination of the surgical specimen shows inadequate surgical margins, an immediate amputation should be considered, especially if the histologic response to preoperative chemotherapy was poor.