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Bone fractures and segmental bone defects are a significant source of patient morbidity and place a staggering economic burden on the healthcare system. The annual cost of treating bone defects in the US has been estimated to be $5 billion, while enormous costs are spent on bone grafts for bone injuries, tumors, and other pathologies associated with defective fracture healing. Autologous bone grafts represent the gold standard for the treatment of bone defects. However, they are associated with variable clinical outcomes, postsurgical morbidity, especially at the donor site, and increased surgical costs. In an effort to circumvent these limitations, tissue engineering and cell-based therapies have been proposed as alternatives to induce and promote bone repair. This review focuses on the recent advances in bone tissue engineering (BTE), specifically looking at its role in treating delayed fracture healing (non-unions) and the resulting segmental bone defects. Herein we discuss: (1) the processes of endochondral and intramembranous bone formation; (2) the role of stem cells, looking specifically at mesenchymal (MSC), embryonic (ESC), and induced pluripotent (iPSC) stem cells as viable building blocks to engineer bone implants; (3) the biomaterials used to direct tissue growth, with a focus on ceramic, biodegradable polymers, and composite materials; (4) the growth factors and molecular signals used to induce differentiation of stem cells into the osteoblastic lineage, which ultimately leads to active bone formation; and (5) the mechanical stimulation protocols used to maintain the integrity of the bone repair and their role in successful cell …