Growth differentiation factor 5 (GDF5) is a member of the bone morphogenic protein (BMP) family and plays critical roles in organ development processes including bone, cartilage, ligament, and joint formation. GDF5 is expressed in the cartilage primordium in the early limb development, and in the interzone of joint formation sites. GDF5 is also observed in adult tissue and cell lines. This spatialtemporal expression pattern of GDF5 proves its essential role in the formation of bone and cartilage. Similar to other members of BMPs, the signaling cascade of GDF5 is originated through binding to type I and type II receptors and thus regulating the downstream intracellular biochemical processes. Mutations of GDF5 are associated with several human and animal diseases that are characterized by skeletal deformity such as short digits and short limbs. In vitro and in vivo studies demonstrated that overexpression of GDF5 or administration of recombinant protein promotes chondrogenesis and osteogenesis. Moreover, a promising feature of GDF5 is osteoinduction, which is used in tissue engineering for bone repair with or without a carrier in animal platforms and in human preclinical settings. The exciting results signify that GDF5 is a compelling candidate for bone tissue engineering by enhancing osteogenesis and angiogenesis. In this review, we will focus the discussion on the basic structure, signaling pathways, function in cartilage and bone formation, and potential clinical application of GDF5 in bone tissue regeneration.