Skeletal elements have a diverse range of shapes and sizes specialized to their various roles including protecting internal organs, locomotion, feeding, hearing, and vocalization. The precise positioning, size, and shape of skeletal elements is therefore critical for their function. During embryonic development, bone forms by endochondral or intramembranous ossification and can arise from the paraxial and lateral plate mesoderm or neural crest. This review describes inductive mechanisms to position and pattern bones within the developing embryo, compares and contrasts the intrinsic vs extrinsic mechanisms of endochondral and intramembranous skeletal development, and details known cellular processes that precisely determine skeletal shape and size. Key cellular mechanisms are employed at distinct stages of ossification, many of which occur in response to mechanical cues (eg, joint formation) or preempting future load‐bearing requirements. Rapid shape changes occur during cellular condensation and template establishment. Specialized cellular behaviors, such as chondrocyte hypertrophy in endochondral bone and secondary cartilage on intramembranous bones, also dramatically change template shape. Once ossification is complete, bone shape undergoes functional adaptation through (re)modeling. We also highlight how alterations in these cellular processes contribute to evolutionary change and how differences in the embryonic origin of bones can influence postnatal bone repair.