In 1742, H.L. Duhamel published a report in which the osteogenic function of periosteum was described. In 1932 H.B. Fell was the first to successfully culture periosteum; Fell concluded that this tissue might have the capability to form mineralized tissue in vitro. In the 1990s the research group of A.L. Caplan pioneered work exploring the osteogenic potential of periosteal cells in the field of bone engineering. On the basis of these studies a number of research groups have developed hard tissue generation concepts that aim to repeat the clinical success of bone autografts by culturing cells from periosteum and seeding a sufficient quantity of those cells into scaffolds made of biomaterials of natural and synthetic origin. The highly porous matrices support the induction of bone regeneration by creating and maintaining a space that facilitates progenitor cell migration, proliferation, and differentiation as well as graft revascularization. In this way, a host tissue-scaffold cell interphase might be created that allows reproduction of the intrinsic properties of autogenous bone, including the ability to be incorporated into the surrounding host bone and to continue normal bone-remodeling processes. This review discusses the history and state of the art of bone tissue engineering from a periosteum and periosteal cell source point of view and attempts to indicate future research directions.