This paper describes the development and initial cadaver studies using a prototype image-guided surgery system for femoroplasty, which is a potential alternative treatment for reducing fracture risk in patients with severe osteoporosis. Our goal is to develop an integrated surgical guidance system that will allow surgeons to augment the femur using patient-specific biomechanical planning and intraoperative analysis tools. This paper focuses on the intraoperative module, which provides real-time navigation of an injection device and estimates the distribution of the injected material relative to the preoperative plan. Patient registration is performed using intensity-based 2D/3D registration of X-ray images and preoperative CT data. To co-register intraoperative X-ray images and optical tracker coordinates, we integrated a custom optically-tracked fluoroscope fiducial allowing real-time visualization of the injection device with respect to the patient's femur. During the procedure, X-ray images were acquired to estimate the 3D distribution of the injected augmentation material (e.g. bone cement). Based on the injection progress, the injection plan could be adjusted if needed to achieve optimal distribution. In phantom experiments, the average target registration error at the center of the femoral head was 1.4 mm and the rotational error was 0.8 degrees when two images were used. Three cadaveric studies demonstrated efficacy of the navigation system. Our preliminary simulation study of the 3D shape reconstruction algorithm demonstrated that the 3D distribution of the augmentation material could be estimated within 12% error from six X-ray images.