While century old clinical reports document the periosteum's remarkable regenerative capacity, only in the past decade have scientists undertaken mechanistic investigations of periosteum's regenerative potential. Here we outline three presentations from a 2012 Orthopaedic Research Society Workshop which reviewed the current state of the art in molecular, cellular and tissue scale approaches to elucidate the mechanisms underlying the periosteum's regenerative potential and translational therapies as well as engineering solutions inspired by the periosteum's remarkable regenerative capacity. First, we highlight the development of the periosteum and its role in bone repair, noting that the entire population of osteoblasts within periosteum, and at endosteal and trabecular bone surfaces within the bone marrow, derive from the embryonic perichondrium. Secondly, we underscore the role of periosteum derived cells in postnatal bone healing and regeneration; cells of the periosteum contribute more to formation of cartilage and bone within the callus during fracture healing than do cells of the bone marrow or endosteum, which not migrate out of the bone marrow compartment. Furthermore, a current healing paradigm regards the activation, expansion and differentiation of periosteal stem/progenitor cells as an essential step in building a template for subsequent neovascularization, bone formation and remodeling. Thirdly, the periosteum comprises a complex, composite structure, providing a niche for pluripotent cells and a repository for molecular factors that modulate cell behavior. The periosteum's advanced, "smart" material properties change depending on the mechanical, chemical and biological state of the tissue. Understanding periosteum development, progenitor cell-driven initiation of periosteum's endogenous tissue building capacity, as well as the complex structure-function relationships of periosteum as an advanced material are important for harnessing and engineering ersatz materials to mimic the periosteum's remarkable regenerative capacity.