AbstractHeterotopic ossification (HO) is a double‐edged sword. Pathological HO presents as an undesired clinical complication, whereas controlled heterotopic bone formation by synthetic osteoinductive materials shows promising therapeutic potentials for bone regeneration. However, the mechanism of material‐induced heterotopic bone formation remains largely unknown. Early acquired HO being usually accompanied by severe tissue hypoxia prompts the hypothesis that hypoxia caused by the implantation coordinates serial cellular events and ultimately induces heterotopic bone formation in osteoinductive materials. The data presented herein shows a link between hypoxia, macrophage polarization to M2, osteoclastogenesis, and material‐induced bone formation. Hypoxia inducible factor‐1α(HIF‐1α), a crucial mediator of cellular responses to hypoxia, is highly expressed in an osteoinductive calcium phosphate ceramic (CaP) during the early phase of implantation, while pharmacological inhibition of HIF‐1αsignificantly inhibits M2 macrophage, subsequent osteoclast, and material‐induced bone formation. Similarly, in vitro, hypoxia enhances M2 macrophage and osteoclast formation. Osteoclast‐conditioned medium enhances osteogenic differentiation of mesenchymal stem cells, such enhancement disappears with the presence of HIF‐1αinhibitor. Furthermore, metabolomics analysis reveals that hypoxia enhances osteoclastogenesis via the axis of M2/lipid‐loaded macrophages. The current findings shed new light on the mechanism of HO and favor the design of more potent osteoinductive materials for bone regeneration.