In tissue engineering, cells are grown often on scaffolds and subjected to chemical/mechanical stimuli. Most such cultures still use fetal bovine serum (FBS) despite its known disadvantages including ethical concerns, safety issues, and variability in composition, which greatly influences the experimental outcomes. To overcome the disadvantages of using FBS, chemically defined serum substitute medium needs to be developed. Development of such medium depends on cell type and application - which makes it impossible to define one universal serum substitute medium for all cells in any application. Here, we developed a serum substitute medium for bone tissue engineering (BTE) in a step-by-step process. Essential components were added to the medium while human bone marrow mesenchymal stromal cells (hBMSCs, osteoblast progenitor cells) were cultured in two-dimensional (2D) and three-dimensional (3D) substrates. In a 3-week culture, the developed serum substitute medium worked equally well as FBS containing medium in term of cell attachment to the substrate, cell survival, osteoblast differentiation, and deposition of extracellular matrix. In the next step, the use of serum substitute medium was evaluated when culturing cells under mechanical loading in the form of shear stress. The outcomes showed that the application of shear stress is essential to improve extracellular matrix formation while using serum substitute medium. The developed serum substitute medium could pave the way in replacing FBS for BTE studies eliminating the use of controversial FBS and providing a better-defined chemical environment for BTE studies.