Hypertrophic cartilage provides the morphological and biochemical template for orchestrating bone growth. To produce a bone-inductive material such as hypertrophic cartilage for clinical use, we have conditionally immortalized hypertrophic chondrocytic cells from human femur and expanded them in vitro through more than 145 divisions. The clonal cell lines generated by this process consistently express signals that induce both rat and human marrow cells to differentiate in vitro into osteoblastic cells. Further, implantation of the cell-free extracellular matrix from the immortalized chondrocytic cells causes vascularized bone to form in vivo in bony defects, but not in ectopic sites such as skeletal muscle. This study shows that molecular techniques can be used to generate bespoke human cell lines for bone tissue engineering. It also demonstrates that matrix material generated from human immortalized hypertrophic chondrocytic cells may provide an abundant, efficacious, and safer alternative to bone autograft--the currently preferred material for fracture repair.