Rapid and effective repair of injured or diseased bone defects remains a major challenge due to shortages of implants. Smart hydrogels that respond to internal and external stimuli to achieve therapeutic actions in a spatially and temporally controlled manner have recently attracted much attention for bone therapy and regeneration. These hydrogels can be modified by introducing responsive moieties or embedding nanoparticles to increase their capacity for bone repair. Under specific stimuli, smart hydrogels can achieve variable, programmable, and controllable changes on demand to modulate the microenvironment for promoting bone healing. In this review, we highlight the advantages of smart hydrogels and summarize their materials, gelation methods, and properties. Then, we overview the recent advances in developing hydrogels that respond to biochemical signals, electromagnetic energy, and physical stimuli, including single, dual, and multiple types of stimuli, to enable physiological and pathological bone repair by modulating the microenvironment. Then, we discuss the current challenges and future perspectives regarding the clinical translation of smart hydrogels.