The extracellular microenvironment plays a significant role in controlling cellular behavior. Identification of appropriate biomaterials that support cellular attachment, proliferation and, most importantly in the case of human embryonic stem cells, lineage-specific differentiation is critical for tissue engineering and cellular therapy. In addition to growth factors and morphogenetic factors known to induce lineage commitment of stem cells, a number of scaffolding materials, including synthetic and naturally-derived biomaterials, have been utilized in tissue engineering approaches to direct differentiation. This review focuses on recent emerging findings and well-characterized differentiation models of human embryonic stem cells. Additionally, we also discuss about various strategies that have been used in stem cell expansion.