We address the question of determining the anatomical site that is the source of the experimentally observed strain generated potentials (SGPs) in bone tissue. There are two candidates for the anatomical site that is the SGP source, the collagen-hydroxyapatite porosity and the larger size lacunar-canalicular porosity. In the past it has been argued, on the basis of experimental data and a reasonable model, that the site of the SGPs in bone is the collagen-hydroxyapatite porosity. The theoretically predicted pore radius necessary for the SGPs to reside in this porosity is 16 nm, which is somewhat larger than the pore radii estimated from gas adsorption data where the preponderance of the pores were estimated to be in the range 5–12.5 nm. However, this pore size is significantly larger than the 2 nm size of the small tracer, microperoxidase, which appears to be excluded from the mineralized matrix. In this work a similar model, but one in which the effects of fluid dynamic drag of the cell surface matrix in the bone canaliculi are included, is used to show that it is possible for the generation of SGPs to be associated with the larger size lacunar-canalicular porosity when the hydraulic drag and electrokinetic contribution of the bone fluid passage through the cell coat (glycocalyx) is considered. The consistency of the SGP data with this model is demonstrated. A general boundary condition is introduced to allow for current leakage at the bone surface. The results suggest that the current leakage is small for the in vitro studies in which the strain generated potentials have been measured.