In the past thirty years, a number of biomaterials have shown the ability to induce bone formation when implanted at heterotopic sites, an ability known as osteoinduction. Such biomaterials--osteoinductive biomaterials--hold great potential for the development of new therapies in bone regeneration. Although a variety of well characterised osteoinductive biomaterials have so far been reported in the literature, scientists still lack fundamental understanding of the biological mechanism underlying the phenomenon by which they induce bone formation. This is further complicated by the observations that larger animal models are required for research, since limited, if any, bone induction by biomaterials is observed in smaller animals, including particularly rodents. Besides interspecies variation, variations among individuals of the same species have been observed. Furthermore, comparing different studies and drawing general conclusions is challenging, as these usually differ not only in the physico-chemical and structural properties of the biomaterials, but also in animal model, implantation site and duration of the study. Despite these limitations, the knowledge of material properties relevant for osteoinduction to occur has tremendously increased in the past decades. Here we review the properties of osteoinductive biomaterials, in the light of the model and the conditions under which they were tested. Furthermore, we give an insight into the biological processes governing osteoinduction by biomaterials and our view on the future perspectives in this research field.