The regeneration capacity of knee cartilage can be enhanced by applying periosteal grafts, but this effect varies depending on the different sources of the periosteal grafts applied for cartilage formation. Tibia periosteum can be used to enhance cartilage repair. However, long-term analysis has not been conducted. The endochondral ossification capacity of tibia periosteum during cartilage repair also needs to be investigated. In this study, both vascularized and non-vascularized tibia periosteum grafts were studied to understand the relationship between tissue perfusion of the periosteum graft and the effects on cartilage regeneration and bone formation. Furthermore, anti-ossification reagents were added to evaluate the efficacy of the prevention of bone formation along with cartilage regeneration. A critical-size cartilage defect (4 × 4 mm) was created and was covered with an autologous tibia vascularized periosteal flap or with a non-vascularized tibia periosteum patch on the knee in the rabbit model. A portion of the vascularized periosteum group was also treated with the anti-osteogenic reagents Fulvestrant and IL1β to inhibit unwanted bone formation. Our results indicated that the vascularized periosteum significantly enhanced cartilage regeneration in the cartilage defect region in long-term treatment compared to the non-vascularized group. Furthermore, the addition of anti-osteogenic reagents to the vascularized periosteum group suppressed bone formation but also reduced the cartilage regeneration rate. Our study using vascularized autologous tissue to repair cartilage defects of the knee may lead to the modification of current treatment in regard to osteoarthritis knee repair.