Objective To summarize the progress of Masquelet technique to repair bone defect. Methods The recent literature concerning the application of Masquelet technique to repair bone defect was extensively reviewed and summarized. Results Masquelet technique involves a two-step procedure. First, bone cement is used to fill the bone defect after a thorough debridement, and an induced membrane structure surrounding the spacer formed; then the bone cement is removed after 6-8 weeks, and rich cancellous bone is implanted into the induced membrane. Massive cortical bone defect is repaired by new bone forming and consolidation. Experiments show that the induced membrane has vascular system and is also rich in vascular endothelial growth factor, transforming growth factor β1, bone morphogenetic protein 2, and bone progenitor cells, so it has osteoinductive property; satisfactory results have been achieved in clinical application of almost all parts of defects, various types of bone defect and massive defect up to 25 cm long. Compared with other repair methods, Masquelet technique has the advantages of reliable effect, easy to operate, few complications, low requirements for recipient site, and wide application. Conclusion Masquelet technique is an effective method to repair bone defect and is suitable for various types of bone defect, especially for bone defects caused by infection and tumor resection.