Cartilage organoids (COs), novel three-dimensional in vitro tissue models derived from stem-cell-driven self-assembly, are capable of recapitulating partial tissue architecture, extracellular matrix composition and key cellular biological behaviors of native articular cartilage. They offer valuable research alternatives to conventional two-dimensional cell culture and animal experiments for deciphering pathological mechanisms of osteoarthritis (OA), performing high-throughput drug screening, and implementing regenerative repair of cartilage defects. Conventional two-dimensional monolayer cell culture cannot reconstruct the complex in vivo cartilage microenvironment characterized by hypoxia, dynamic mechanical loading, and intricate crosstalk between cells and extracellular matrix. Under such culture conditions, chondrocytes tend to undergo dedifferentiation and lose phenotypic characteristics specific to hyaline cartilage. In addition, animal models are constrained by inter-species discrepancies, obvious individual heterogeneity and relatively high experimental costs, which often limit the reliable translation of pre-clinical findings to human clinical scenarios. As promising alternative research tools, COs can maintain stable chondrocyte phenotypes. By applying pro-inflammatory stimuli or excessive mechanical stress, researchers can reconstruct OA-mimicking pathological microenvironments in vitro, which facilitates the exploration of critical molecular events such as chondrocyte hypertrophy, cellular senescence and extracellular matrix degradation. Meanwhile, COs possess translational prospects for regenerative therapy through direct transplantation into articular cartilage defect sites, providing a potential cell-based strategy for patients suffering from irreversible cartilage damage. Patient-derived COs further enable personalized pathological simulation, making it feasible to evaluate individual-specific drug responses ex vivo and avoid the confounding interference from inter-individual biological variation. Such personalized models also hold great promise for uncovering patient-specific disease signatures that cannot be readily observed in universal experimental systems. At present, in vitro fabrication of COs mainly contains two technical routes: scaffold-free self-assembly and scaffold-assisted culture. Available seed cell sources include induced pluripotent stem cells, multiple subtypes of mesenchymal stem cells as well as primary chondrocytes. Each cell source exhibits respective advantages and limitations in terms of chondrogenic differentiation efficiency, risk of pathological hypertrophic transformation and immunogenic property. Nevertheless, several prominent bottlenecks still hinder further progress of COs research. It remains technically difficult to faithfully reproduce temporospatial biochemical concentration gradients and physiological dynamic mechanical microenvironment of native cartilage. When COs grow above a certain millimeter scale, insufficient diffusion of nutrients and oxygen frequently gives rise to necrosis of cells located in the central core region. Long-term in vitro culture also increases risks of chondrocyte dedifferentiation and aberrant hypertrophy. Furthermore, the absence of an integrated quality-control system combining histological, biochemical and biomechanical evaluation indicators severely impedes experimental reproducibility and subsequent clinical translation across different laboratories. Many existing protocols remain confined to laboratory-scale operation and are hard to scale up for future clinical demands. This review summarizes developmental patterns and physiological microenvironment features of articular cartilage, compares merits and drawbacks of different seed cell types and construction protocols, and dissects four core restrictive challenges. Multiple optimization approaches are elaborated, including biomaterial modification, bioreactor cultivation, microfluidic organ-on-a-chip systems and cadherin-functionalized microspheres. Future research directions represented by hybrid organoid-chip composite platforms are also discussed. This work intends to advance standardized fabrication of COs and promote their broad applications in basic mechanistic research, high-throughput drug evaluation and regenerative medicine.