Plants develop unorganized cell masses like callus and tumors in response to various biotic and abiotic stimuli. Since the historical discovery that the combination of two growth-promoting hormones, auxin and cytokinin, induces callus from plant explants in vitro, this experimental system has been used extensively in both basic research and horticultural applications. The molecular basis of callus formation has long been obscure, but we are finally beginning to understand how unscheduled cell proliferation is suppressed during normal plant development and how genetic and environmental cues override these repressions to induce callus formation. In this review, we will first provide a brief overview of callus development in nature and in vitro and then describe our current knowledge of genetic and epigenetic mechanisms underlying callus formation.