The capabilities of stem cells continue to be revealed, leading to excitement regarding potential new therapies. Regenerative medicine is an area in which stem cells hold great promise for overcoming the challenge of limited cell sources for tissue repair. Biomaterials play an important role in directing tissue growth and may provide another tool to manipulate and control stem cell behavior. Biomaterials are made from natural or synthetic polymers and can be processed into three-dimensional scaffolds designed to promote cell proliferation and/or differentiation that ultimately produces new tissue. Stem cells will have a significant impact on the fields of regenerative medicine and tissue engineering as a powerful cell source that will work, in conjunction with biomaterials, to treat tissue and organ loss. Herein, we survey our latest research on applying embryonic stem (ES) cells to hydrogel biomaterials for engineering musculoskeletal tissues, emphasizing the unique biomaterial requirements of ES cells for differentiation and tissue development.