The injury and degeneration of articular cartilage and associated arthritis are leading causes of disability worldwide. Cartilage tissue engineering as a treatment modality for cartilage defects has been investigated for over 20 years. Various scaffold materials have been developed for this purpose, but has yet to achieve feasibility and effectiveness for widespread clinical use. Currently, the regeneration of articular cartilage remains a formidable challenge, due to the complex physiology of cartilage tissue and its poor healing capacity. Although intensive research has been focused on the developmental biology and regeneration of cartilage tissue and a diverse plethora of biomaterials have been developed for this purpose, cartilage regeneration is still suboptimal, such as lacking a layered structure, mechanical mismatch with native cartilage and inadequate integration between native tissue and implanted scaffold. The ideal scaffold material should have versatile properties that actively contribute to cartilage regeneration. Functional scaffold materials may overcome the various challenges faced in cartilage tissue engineering by providing essential biological, mechanical, and physical/chemical signaling cues through innovative design. This review thus focuses on the complex structure of native articular cartilage, the critical properties of scaffolds required for cartilage regeneration, present strategies for scaffold design, and future directions for cartilage regeneration with functional scaffold materials. © 2012 Wiley Periodicals, Inc. J Biomed Mater Res Part A: 100A: 2526–2536, 2012.