The process of repairing significant bone defects requires the recruitment of a considerable number of cells for osteogenesis-related activities, which implies the consumption of a substantial amount of oxygen and nutrients. Therefore, the limited supply of nutrients and oxygen at the defect site is a vital constraint that affects the regenerative effect, which is closely related to the degree of a well-established vascular network. Hypoxia-inducible factor (HIF-1α), which is an essential transcription factor activated in hypoxic environments, plays a vital role in vascular network construction. HIF-1α, which plays a central role in regulating cartilage and bone formation, induces vascular invasion and differentiation of osteoprogenitor cells to promote and maintain extracellular matrix production by mediating the adaptive response of cells to changes in oxygen levels. However, the application of HIF-1α in bone tissue engineering is still controversial. As such, clarifying the function of HIF-1α in regulating the bone regeneration process is one of the urgent issues that need to be addressed. This review provides insight into the mechanisms of HIF-1α action in bone regeneration and related recent advances. It also describes current strategies for applying hypoxia induction and hypoxia mimicry in bone tissue engineering, providing theoretical support for the use of HIF-1α in establishing a novel and feasible bone repair strategy in clinical settings.