The periosteum is a thin layer of connective tissue that covers the outer surface of a bone in all places except at joints (which are protected by articular cartilage). As opposed to bone itself, it has nociceptive nerve endings, making it very sensitive to manipulation. It also provides nourishment in the form of blood supply to the bone. The periosteum is connected to the bone by strong collagenous fibres called Sharpey's fibres, which extend to the outer circumferential and interstitial lamellae of bone. The periosteum consists of an outer “fibrous layer” and inner “cambium layer”. The fibrous layer contains fibroblasts while the cambium layer contains progenitor cells which develop into osteoblasts that are responsible for increasing bone width. After a bone fracture the progenitor cells develop into osteoblasts and chondroblasts which are essential to the healing process. This review discusses the anatomy, histology and molecular biology of the periosteum in detail.