Current treatment options for skeletal repair, including immobilization, rigid fixation, alloplastic materials and bone grafts, have significant limitations. Bone tissue engineering offers a promising method for the repair of bone deficieny caused by fractures, bone loss and tumors. The use of adipose derived stem cells (ASCs) has received attention because of the self-renewal ability, high proliferative capacity and potential of osteogenic differentiation in vitro and in vivo studies of bone regeneration. Although cell therapies using ASCs are widely promising in various clinical fields, no large human clinical trials exist for bone tissue engineering. The aim of this review is to introduce how they are harvested, examine the characterization of ASCs, to review the mechanisms of osteogenic differentiation, to analyze the effect of mechanical and chemical stimuli on ASC osteodifferentiation, to summarize the current knowledge about usage of ASC in vivo studies and clinical trials, and finally to conclude with a general summary of the field and comments on its future direction.