The periosteum is the major source of cells involved in fracture healing. We sought to characterize progenitor cells and their contribution to bone fracture healing. The periosteum is highly enriched for progenitor cells, including Sca1+ cells, CFU-F and label-retaining cells compared to the endosteum and bone marrow. Using lineage tracing, we demonstrate that αSMA identifies long-term, slow-cycling, self-renewing osteochondroprogenitors in the adult periosteum that are functionally important for bone formation during fracture healing. In addition, Col2.3CreER-labeled osteoblast cells contribute around 10% of osteoblasts, but no chondrocytes in fracture calluses. Most periosteal osteochondroprogenitors following fracture, can be targeted by αSMACreER. Previously identified skeletal stem cell populations were common in periosteum, but contained high proportions of mature osteoblasts. We have demonstrated that the periosteum is highly enriched for skeletal progenitor cells and there is heterogeneity in the populations of cells that contribute to mature lineages during periosteal fracture healing.