Bone regeneration is a critical problem in modern clinical practice. Osteocytes are the most abundant cell population of mature adult bone that plays major roles in the regulation of bone formation. In humans, the segmental bone defects cannot be repaired by endogenous regenerative mechanisms. Bone tissue engineering (BTE) is a promising option for the treatment of difficult segmental and skeletal defects. BTE requires suitable cell sources with rapid expansion and adequate function, inducible factors, and scaffolds, to successfully regenerate or repair the bone injury. To overcome the disadvantages of using allogeneic and autologous tissue grafts, stem cell-based therapy has progressed an advanced topic in regenerative medicine. In the past few decades, numerous attempts have been made to generate osteocytes by using pluripotent stem cells (PSCs) for repair and regeneration of bone defects. Human induced pluripotent stem cells (hiPSCs) are PSCs that can self-renew and differentiate into a variety of cell types. Reprogramming of human somatic cells into hiPSCs provides a new opportunity for regenerative medicine, cell-based drug discovery, disease modeling, and toxicity assessment. The ability to differentiate hiPSCs towards mesenchymal stem cells (iPSC-MSCs) is essential for treating bone-related damages and injuries. Several in vitro studies revealed that the cell type of origin for iPSCs, a combination of transcription factors, the type of promoter in the vector, transduction methods, scaffolds, differentiating techniques, and culture medium may affect the osteogenic differentiation potential of hiPSCs. This review will focus on several factors that influence the osteogenic differentiation of human iPSCs.