The field of regenerative medicine and tissue engineering is an ever evolving field that holds promise in treating numerous musculoskeletal diseases and injuries. An important impetus in the development of the field was the discovery and implementation of stem cells. The utilization of mesenchymal stem cells, and later embryonic and induced pluripotent stem cells, opens new arenas for tissue engineering and presents the potential of developing stem cell-based therapies for disease treatment. Multipotent and pluripotent stem cells can produce various lineage tissues, and allow for derivation of a tissue that may be comprised of multiple cell types. As the field grows, the combination of biomaterial scaffolds and bioreactors provides methods to create an environment for stem cells that better represent their microenvironment for new tissue formation. As technologies for the fabrication of biomaterial scaffolds advance, the ability of scaffolds to modulate stem cell behavior advances as well. The composition of scaffolds could be of natural or synthetic materials and could be tailored to enhance cell self-renewal and/or direct cell fates. In addition to biomaterial scaffolds, studies of tissue development and cellular microenvironments have determined other factors, such as growth factors and oxygen tension, that are crucial to the regulation of stem cell activity. The overarching goal of stem cell-based tissue engineering research is to precisely control differentiation of stem cells in culture. In this article, we review current developments in tissue engineering, focusing on several stem cell sources, induction factors including growth factors, oxygen tension, biomaterials, and mechanical stimulation, and the internal and external regulatory mechanisms that govern proliferation and differentiation.