Forty-one cases of parosteal osteosarcoma were reviewed clinically, radiologically and pathologically. The fibrous and cartilaginous elements of each tumour were graded from I to IV for malignancy. Primary intramedullary involvement was found in one third of Grade I lesions, two-thirds of Grade II and nearly 90% of Grade III lesions. Thirty-five patients with adequate follow-up were also studied and evaluated as to the adequacy of surgical management in relation to the later development of local recurrence or metastasis or both. No metastases were seen from Grade I tumours despite a number of local recurrences. One third of patients with Grade II and half of those with Grade III tumours developed pulmonary metastases and died, all with involvement of the medullary cavity before distant spread. No patients with adequate surgical management developed local recurrence; in those with inadequate treatment there was an 88% local recurrence rate.