One embodiment of the invention is demineralized bone putty composition comprises: (1) demineralized bone matrix (DBM); and (2) a lipid fraction selected from the group consisting of lecithin and a mixture of lecithin and triglycerides containing unsaturated fatty acids. The putty composition is moldable, biocompatible, slowly resorbable, insoluble in tissue fluids, and non-extrudable. The composition delivers a biologically active product to animals and humans that will enhance bone formation at sites where bone is lost, deficient, or present in suboptimal amounts. The composition can further comprise calcium, an antioxidant such as Vitamin E or Vitamin C, or a hydrophilic polymer such as methylcellulose, a methylcellulose derivative, carboxymethyl cellulose, or hydroxypropyl methylcellulose. A second embodiment of the invention is a demineralized bone paste composition comprising: (1) about 15% to about 75% of an emulsion carrier, such as an aqueous phase; and (2) a bone-material-containing phase comprising: (a) demineralized bone matrix (DBM); and (b) an emulsifier component that is compatible with lipids. This bone paste composition is moldable, biocompatible, slowly resorbable, miscible with bone graft materials, soluble or partially soluble in tissue fluids, and extrudable.