The periosteum is known as the thin connective tissue covering most bone surfaces. Its extrusive bone regeneration capacity was confirmed from the very first century-old studies. Recently, pluripotent stem cells in the periosteum with unique physiological properties were unveiled. Existing in dynamic contexts and regulated by complex molecular networks, periosteal stem cells emerge as having strong capabilities of proliferation and multipotential differentiation. Through continuous exploration of studies, we are now starting to acquire more insight into the great potential of the periosteum in bone formation and repair in situ or ectopically. It is undeniable that the periosteum is developing further into a more promising strategy to be harnessed in bone tissue regeneration. Here, we summarized the development and structure of the periosteum, cell markers, and the biological features of periosteal stem cells. Then, we reviewed their pivotal role in bone repair and the underlying molecular regulation. The understanding of periosteum-related cellular and molecular content will help enhance future research efforts and application transformation of the periosteum.