We have studied 560 patients with osteosarcoma of a limb, who had been treated by neoadjuvant chemotherapy, in order to analyse the incidence of local and systemic recurrence according to the type of surgery undertaken. Of these, 465 patients had a limb-salvage procedure and 95 amputation or rotationplasty. At a median follow-up of 10.5 years there had been 225 recurrences. The five-year disease-free survival and overall survival rates were 60.7% and 68.5%, respectively, with no significant difference between patients undergoing amputation and those undergoing resection. The incidence of local recurrence was the same for patients treated by either amputation or limb salvage and correlated significantly with the margins of surgical excision and the histological response to chemotherapy. The outcome for patients with a local recurrence was significantly worse than for those who had recurrent disease with metastases only. We conclude that limb-salvage procedures are relatively safe in osteosarcoma treated by neoadjuvant chemotherapy. They should, however, only be performed in institutions where the margins of surgical excision and the histological response to chemotherapy can be accurately assessed. If the margins are inadequate and the histological response to chemotherapy is poor an immediate amputation should be considered.