Periosteal stem cells are critical for bone regeneration, while the numbers will decrease with age. This study focused on whether Prx1+ cell, a kind of periosteal stem cell, could stimulate bone regeneration in aged mice. Four weeks and 12 months old Prx1CreER‐GFP; Rosa26tdTomato mice were used to reveal the degree of Prx1+ cells participating in the femoral fracture healing procedure. One week, 8 weeks, 12 and 24 months old Prx1CreER‐GFP mice were used to analyse the real‐time distribution of Prx1+ cells. Twelve months old C57BL/6 male mice (n = 96) were used to create the bone defect model and, respectively, received hydrogel, hydrogel with Prx1− mesenchymal stem cells and hydrogel with Prx1+ cells. H&E staining, Synchrotron radiation‐microcomputed tomography and mechanical test were used to analyse the healing results. The results showed that tdTomato+ cells were involved in bone regeneration, especially in young mice. At the same time, GFP+ cells decreased significantly with age. The Prx1+ cells group could significantly improve bone regeneration in the murine bone defect model via directly differentiating into osteoblasts and had better osteogenic differentiation ability than Prx1− mesenchymal stem cells. Our finding revealed that the quantity of Prx1+ cells might account for decreased bone regeneration ability in aged mice, and transplantation of Prx1+ cells could improve bone regeneration at the bone defect site.