Bone tissue engineering has long been a focal point of research, aiming to address critical large segmental bone defects resulting from severe trauma, tumors, and other bone-related diseases. Despite significant advancements in conventional bone tissue engineering, the simulation of the intricate microenvironment characteristic of natural bone tissue remains inadequate. Natural bone is characterized by intricate macroscopic and microscopic architectures, along with a dynamic microenvironment that facilitates processes such as bone formation, remodeling, and repair. Bone organoids-three-dimensional structures that emulate natural bone tissue derived from stem cells-represent a substantial advancement in both bone tissue engineering and precision medicine. These organoids present a promising pathway for enhancing our understanding of bone biology and disease mechanisms. Their unique potential within precision medicine is underscored by their applications in personalized drug testing, disease modeling, and as platforms for regenerative therapies. As this field continues to progress, bone organoids are poised to play an essential role in developing tailored treatment strategies for disorders related to bones. In this review, we summarize the roles of cell types, biomaterials and culture techniques in the construction of bone organoids, and emphasize the key significance of microenvironment in guiding the maturation of bone organoids. In addition, we will discuss the standardization, current limitations, and future directions of bone organoids to provide insights for research and clinical applications.