The periosteum plays a pivotal role during bone development and repair contributing to bone vascularization and osteoprogenitor cells source. We propose a periosteal substitute engineered using a platelet-rich plasma (PRP) membrane incorporating autologous bone marrow-derived mesenchymal stem cells (PRP/BMSC gel membrane) to be wrapped around an osteoconductive scaffold for regeneration of compromised bone defects. The PRP/BMSC gel membrane was optimized using different compositions for optimal release of vascular endothelial growth factor (VEGF) and platelet derived growth factor-BB (PDGF-BB). Survival and proliferation of cells in the PRP gel membrane with time were confirmed in addition to their osteogenic capacity. Furthermore, to evaluate the possible effects of the PRP/BMSC gel membrane on surrounding progenitor cells in the injury area, we found that the PRP gel membrane products could significantly induce the migration of human endothelial cells in vitro, and increased the expression of bone morphogenetic protein 2 in cultured BMSC. These cells also secreted significant amounts of soluble proangiogenic factors, such as PDGF-BB, VEGF, and interleukin-8 (IL-8). Finally, the functionality of the PRP/BMSC gel membrane periosteal substitute for bone regeneration was tested in vivo both in an ectopic mouse model as well as in a rabbit segmental bone defect model providing evidence of its capacity to biomimic a periosteal response enhancing bone regeneration.