Embryonic stem cells can provide an unlimited supply of pluripotent cells for tissue engineering applications. Bone tissue engineering by directly differentiating ES cells (ESCs) into osteoblasts has been unsuccessful so far. Therefore, we investigated an alternative approach, based on the process of endochondral ossification. A cartilage matrix was formed in vitro by mouse ESCs seeded on a scaffold. When these cartilage tissue-engineered constructs (CTECs) were implanted s.c., the cartilage matured, became hypertrophic, calcified, and was ultimately replaced by bone tissue in the course of 21 days. Bone aligning hypertrophic cartilage was observed frequently. Using various chondrogenic differentiation periods in vitro, we demonstrated that a cartilage matrix is required for bone formation by ESCs. Chondrogenic differentiation of mesenchymal stem cells and articular chondrocytes showed that a cartilage matrix alone was not sufficient to drive endochondral bone formation. Moreover, when CTECs were implanted orthotopically into critical-size cranial defects in rats, efficient bone formation was observed. We report previously undescribed ESCbased bone tissue engineering under controlled reproducible conditions. Furthermore, our data indicate that ESCs can also be used as a model system to study endochondral bone formation.osteoblast ͉ cartilage ͉ endochondral ossification ͉ scaffold ͉ in vivo