Cancellous bone allografts are increasingly attractive because the high porosity allows for rapid in-growth and the stiffness closely matches that of the host bone. Allografts are sterilized with gamma radiation which can affect the mechanical properties and damage processes of bone. The purpose of this study was to determine the effects of gamma radiation sterilization on yield properties of dense cancellous bone and identify differences in microdamage accumulation. Compression tests of cylindrical bovine proximal tibia specimens sterilized at a dose of 29.32 kGy and control specimens were conducted to 1.3% strain. Histological sections were obtained to examine microscopic tissue damage. Sterilization had no effect on the yield properties of cancellous bone, but irradiated specimens had higher residual strain and significantly more microscopic tissue damage in the form of microfractures. This suggests that sterilization changes the damage processes of cancellous bone and could affect the performance of an allograft following overloading.