Despite well-established bone-grafting techniques, large bone defects still represent a challenge for orthopaedic and reconstructive surgeons. Efforts have therefore been made to develop osteoconductive, osteoinductive and osteogenic bone-replacement systems. According to its original definition, tissue engineering is an 'interdisciplinary field that applies the principles of engineering and the life sciences toward the development of biological substitutes that restore, maintain, or improve tissue function'. It is based on the understanding of tissue formation and regeneration, and aims to grow new functional tissues rather than to build new spare parts. This review focuses on the principles of tissue engineering applied to the creation of bioartificial bone tissue. Important aspects, such as osteogenic cells, matrix materials, inter- and intra-cellular communication, growth factors, gene therapy and current concepts of bone tissue engineering are reviewed. First clinical applications are discussed. An outlook provides insight into the possible future perspectives of bone tissue engineering.