Bone defects and fractures present significant clinical challenges, particularly in orthopedic and maxillofacial applications. While minor bone defects may be capable of healing naturally, those of a critical size necessitate intervention through the use of implants or grafts. The utilization of traditional methodologies, encompassing autografts and allografts, is constrained by several factors. These include the potential for donor site morbidity, the restricted availability of suitable donors, and the possibility of immune rejection. This has prompted extensive research in the field of bone tissue engineering to develop advanced synthetic and bio-derived materials that can support bone regeneration. The optimal bone substitute must achieve a balance between biocompatibility, bioresorbability, osteoconductivity, and osteoinductivity while simultaneously providing mechanical support during the healing process. Recent innovations include the utilization of three-dimensional printing, nanotechnology, and bioactive coatings to create scaffolds that mimic the structure of natural bone and enhance cell proliferation and differentiation. Notwithstanding the advancements above, challenges remain in optimizing the controlled release of growth factors and adapting materials to various clinical contexts. This review provides a comprehensive overview of the current advancements in bone substitute materials, focusing on their biological mechanisms, design considerations, and clinical applications. It explores the role of emerging technologies, such as additive manufacturing and stem cell-based therapies, in advancing the field. Future research highlights the need for multidisciplinary collaboration and rigorous testing to develop advanced bone graft substitutes, improving outcomes and quality of life for patients with complex defects.