The effect of plant growth regulators (PGRs), explant orientation and subculturing of callus for different passages on the callus induction and shoot differentiation in a medicinal tree Sapindus trifoliatus L. were investigated. The callus was induced from internodal explants obtained from a mature tree on MS medium containing different PGRs, i.e., 2,4-D, BAP, Kin, and zeatin. However, shoot differentiation from callus was obtained only on a medium containing BAP (0.1–3.0 mg l−1) or higher concentrations of zeatin (3.0 or 5.0 mg l−1). The highest number of shoots was obtained when the callus induced on the medium fortified with 3.0 mg l−1 BAP was transferred to a medium containing a comparatively lower concentration (1.0 mg l−1) of BAP. The orientation of the explant (i.e., horizontal or vertical) did not affect callus initiation and further shoot differentiation significantly. The subculturing of callus for different passages had a pronounced effect on shoot differentiation from the callus. The internodal callus showed 100% response for shoot differentiation and an increase in shoot numbers up to the fourth subculture; but, after that significant decline in response and shoot number. The maximum number of shoots (11.43 ± 0.79) was produced after the subculture up to the fourth passage. Thus, by adopting the approach of harvesting shoots and subculture of the remaining callus for seven passages, an average of 45 shoots per 500 mg callus culture was obtained. Maximum percent rooting in micro shoots was obtained when they were pulse-treated with 0.5 mg l−1 IBA for 24 h and transferred to a full-strength MS medium without auxins. Histological analysis revealed the well-developed apical meristem-like structure with leaf primordia during adventitious shoot bud development. The plants developed through internodal callus were established successfully in soil with a 90% survival rate.