For years it has been recognized that engineering of large bone constructs will be feasible only if the hurdle of vascularization is overcome. Attempts to engineer bone tissue have predominantly focused on intramembranous (direct) bone formation. A relatively new and most likely more physiological approach in this line is endochondral bone formation, comprising an intermediate cartilaginous stage. Cartilage in nature is an avascular tissue and its cells are equipped to survive the poor oxygenation and nutritional conditions inherent to implanted tissues. Subsequent terminal differentiation (hypertrophy) of the chondrocytes initiates the formation of a mineralized matrix that will then be converted into bone. Through this mechanism, our long bones grow and most fractures heal through the process of secondary fracture healing. The feasibility of the attractive concept of endochondral bone tissue engineering has already been shown. Most emphasis has gone to the multipotent stromal cells because of their great potential for expansion and differentiation and immunoprivileged nature. This review will focus on the promises and current status of this new field. Further, potent modulators of endochondral bone tissue engineering, including oxygen tension and mechanical stimuli, will be discussed.