Bone is a dynamic tissue that can always regenerate itself through remodeling to maintain biofunctionality. This tissue performs several vital physiological functions. However, bone scaffolds are required for critical-size damages and fractures, and these can be addressed by bone tissue engineering. Bone tissue engineering (BTE) has the potential to develop scaffolds for repairing critical-size damaged bone. BTE is a multidisciplinary engineered scaffold with the desired properties for repairing damaged bone tissue. Herein, we have provided an overview of the common carbohydrate polymers, fundamental structural, physicochemical, and biological properties, and fabrication techniques for bone tissue engineering. We also discussed advanced biofabrication strategies and provided the limitations and prospects by highlighting significant issues in bone tissue engineering. There are several review articles available on bone tissue engineering. However, we have provided a state-of-the-art review article that discussed recent progress and trends within the last 3-5 years by emphasizing challenges and future perspectives.