Epidermal growth factor receptor (EGFR) signaling plays an important role in bone development. However, knowledge of its specific function in skeletal stem cells during bone healing remains scant. We used a lineage tracing approach and a stem/progenitor cell-specific EGFR overactivation mouse model which is generated by overexpressing heparin-binding EGF-like growth factor (HBEGF), an EGFR ligand, in Prx1-cre mice ( ), to analyze the crucial roles of EGFR signaling in periosteal progenitor cells during fracture healing. Compared with wild type, mice are found to have thicker trabecular and cortical bone structure and exhibit accelerated fracture healing. Single-cell RNA sequencing reveals that is highly expressed in a periosteal progenitor cluster that constitutes a large portion of the callus cells and lays at the center of a developmental path that gives rise to chondrocytes and osteoblasts within the callus. experiments further demonstrate that periosteal progenitors isolated from mice display strong chondrogenic, osteogenic and angiogenic abilities, thus promoting fracture healing. Treating mice with gefitinib, an EGFR inhibitor, completely abolishes the promotional effects in mice. Our data reveal a cellular mechanism of EGFR signaling underlying fracture healing, and suggest that targeting EGFR may provide a potential therapeutic tool for delayed fracture healing or fracture non-union.