Heterotopic ossification (HO) is a debilitating condition defined by the de novo development of bone within non-osseous soft tissues, and can be either hereditary or acquired. The hereditary condition, fibrodysplasia ossificans progressiva is rare but life threatening. Acquired HO is more common and results from a severe trauma that produces an environment conducive for the formation of ectopic endochondral bone. Despite continued efforts to identify the cellular and molecular events that lead to HO, the mechanisms of pathogenesis remain elusive. It has been proposed that the formation of ectopic bone requires an osteochondrogenic cell type, the presence of inductive agent(s) and a permissive local environment. To date several lineage-tracing studies have identified potential contributory populations. However, difficulties identifying cells in vivo based on the limitations of phenotypic markers, along with the absence of established in vitro HO models have made the results difficult to interpret. The purpose of this review is to critically evaluate current literature within the field in an attempt identify the cellular mechanisms required for ectopic bone formation. The major aim is to collate all current data on cell populations that have been shown to possess an osteochondrogenic potential and identify environmental conditions that may contribute to a permissive local environment. This review outlines the pathology of endochondral ossification, which is important for the development of potential HO therapies and to further our understanding of the mechanisms governing bone formation.