In the adult rat femur, lifting a periosteum strip with microscopic bone flakes on its deep surface, if performed without damaging the surrounding microcirculation, rapidly leads to new bone formation and angiogenesis. Using vascular labeling, the pericytes and endothelial cells (ECs) were labeled with monastral blue (MB) in the preformed, preexisting postcapillary venules of the periosteal microcirculation. MB was detectable by light and electron microscopy and it persisted in some of the daughter cells. Between one and 21 hours, the MB labeling was restricted to the pericytes and ECs of postcapillary venules. Immediately afterward, both pericytes and ECs of these vessels were activated and continued to show MB. The phenomenon of pericyte activation includes enlargement, disruption of their basal lamina, separation from the walls of the preformed vessels, and the presence of mitotic figures. At this stage, activated pericytes with MB in their cytoplasm, fibroblast-like cells, and transitional cell forms between them were seen in interstitial areas. After 27 hours, vascular buds appeared and MB was detected in some ECs and pericytes. Between three and six days, when bone-tissue development was observed, some osteoblasts were MB labeled. Previous findings support the hypothesis that when the periosteum is activated, the process of bone formation from cells already present in the periosteum is augmented by proliferation and differentiation of pericytes, which contribute a supplementary population of osteoprogenitor cells.