ABSTRACTDefective or insufficient bone repair and regeneration are common in patients as a result of major trauma or severe disease. Cell therapy with periosteal mesenchymal progenitors, which can be limited in severe injury, serves as a promising approach; however, its efficacy is limited due to a repair‐hostile ischemic tissue microenvironment after traumatic fracture. Here we report that plasminogen (Plg), a factor that is upregulated in these environments, is critical for fracture healing. Plg knockout mice had impaired trabecular and cortical bone structure and exhibited delayed and incomplete fracture healing. Interestingly, Plg deficiency greatly reduced the thickness of expanded periosteum, suggesting a role of Plg in periosteal mesenchymal progenitor‐mediated bone repair. In culture, Plg increased cell proliferation and migration in periosteal mesenchymal progenitors and inhibited cell death under ischemic conditions. Mechanistically, we revealed that Plg cleaved and activated Cyr61 to regulate periosteal progenitor function. Thus, our study uncovers a cellular mechanism underlying fracture healing, by which Plg activates Cyr61 to promote periosteal progenitor proliferation, survival, and migration and improves bone repair after fracture. Targeting Plg may offer a rational and effective therapeutic opportunity for improving fracture healing. © 2021 American Society for Bone and Mineral Research (ASBMR).