Tissue engineering offers a promising strategy to restore injuries resulting from trauma, infection, tumor resection, or other diseases. In spite of significant progress, the field faces a significant bottleneck; the critical need to understand and exploit the interdependencies of tissue healing, angiogenesis, and inflammation. Inherently, the balance of these interacting processes is affected by a number of injury site conditions that represent a departure from physiological environment, including reduced pH, increased concentration of free radicals, hypoglycemia, and hypoxia. Efforts to harness the potential of immune response as a therapeutic strategy to promote tissue repair have led to the identification of natural compounds with significant anti-inflammatory properties. This article provides a concise review of the body’s inflammatory response to biomaterials and describes the role of oxygen as a physiological cue in this process. We proceed to highlight the potential of natural compounds to mediate inflammatory response and improve host-graft integration. Herein, we discuss the use of natural compounds to map signaling molecules and checkpoints that regulate the cross-linkage of immune response and skeletal repair.