Repairing large segmental bone defects above a critical size remains challenging with high risk of delayed union or even non-union. From the perspective of bone development and clinical experience, periosteum plays an indispensable role in bone repair and reconstruction. In this study, we explored the feasibility of using preosteoblast-derived matrix (pODM) as a biomimetic periosteum. By culturing MC3T3-E1 cell sheet on poly(dimethylsiloxane) and performing decellularization, an integral cell-free sheet of pODM could be readily harvested. Bone marrow mesenchymal stem cells (BMSCs) adhered and proliferated well on pODM. In addition, pODM exhibited a chemotactic effect on BMSCs in a concentration-dependent manner and also promoted osteogenic differentiation of BMSCs. Following that, pODM was wrapped around a gelatin methacryloyl (GelMA) hydrogel to construct an engineered periosteum-bone substitute. A rabbit radius segmental bone defect model was used to examine the bone repair efficacy of pODM/GelMA. Upon implantation of pODM/GelMA construct for 12 weeks, the critical-sized bone defects completely healed with remarkable full reconstruction of medullary cavity at the radial diaphysis. Together, this work proposes a high potency of using precursor cell-derived matrix as a biomimetic periosteum, which preserves the beneficial biological factors while avoids the limitations of using exogenous cells for bone regeneration. Combining precursor cell-derived matrix with hydrogel may provide a promising periosteum-bone biomimetic substitute for bone repair.Copyright © 2020. Published by Elsevier Ltd.