The purpose of this study is to investigatethe role of the internal layer of periosteum in bone formation in periosteal distraction osteogenesis. A custom-made devices were placed between the periosteum and lateral surface of the mandible in 10 adult rabbits. 5 Rabbits were sacrificed after 4 weeks and 5 after 8 weeks. Specimens were fixed, decalcified, and stained with hematoxylin and eosin. Histologic examination was performed on all specimens. The histological analysis of specimens extracted from the periosteal chambers at 8 weeks showed small areas of newly formed bone covered by a lining of osteoblasts, followed by a zone of loose granulation tissue in remaining spaces. On the other hand Some woven bone formation was encountered under the bone chambers of distracted devices. Both of periosteum and basal bone are responsible for bone formation in periosteal distraction osteogenesis and the interaction between them are imperative to produce high quality bone.