Damage to cartilage represents one of the most challenging tasks of musculoskeletal therapeutics due to its limited propensity for healing and regenerative capabilities. Lack of current treatments to restore cartilage tissue function has prompted research in this rapidly emerging field of tissue regeneration of functional cartilage tissue substitutes. The development of cartilaginous tissue largely depends on the combination of appropriate biomaterials, cell source, and stimulating factors. Over the years, various biomaterials have been utilized for cartilage repair, but outcomes are far from achieving native cartilage architecture and function. This highlights the need for exploration of suitable biomaterials and stimulating factors for cartilage regeneration. With these perspectives, we aim to present an overview of cartilage tissue engineering with recent progress, development, and major steps taken toward the generation of functional cartilage tissue. In this review, we have discussed the advances and problems in tissue engineering of cartilage with strong emphasis on the utilization of natural polymeric biomaterials, various cell sources, and stimulating factors such as biophysical stimuli, mechanical stimuli, dynamic culture, and growth factors used so far in cartilage regeneration. Finally, we have focused on clinical trials, recent innovations, and future prospects related to cartilage engineering.