Sarcomatous degeneration of fibrous dysplasia has been previously documented in rare cases, often in association with prior radiation therapy. This case report describes the occurrence of osteosarcoma arising in the distal femur of a 15-year-old male with previous biopsy-proven fibrous dysplasia, who had undergone limb lengthening through a distal femoral corticotomy using the technique described by Ilizarov. In addition, distraction osteogenesis through an area of fibrous dysplasia in the proximal tibia produced a new area of fibrous dysplasia in the regenerate tissue as shown by histopathologic examination. This case raises two questions: (a) whether the biologic stimulus of distraction osteogenesis through abnormal metaplastic bone increases the risk of malignant neoplasia, and (b) whether distraction osteogenesis through dysplastic bone is contraindicated, since the regenerate tissue does not form normal bone.