This is the first report concerning the sequence of histological and cytological events occurring during organogenesis from cotyledon-derived meristematic nodules (MNs) in Paeonia ostii ‘Feng Dan’. Sections were made and studies were carried out with dissecting microscope, light microscope, scanning electron microscopy (SEM) and transmission electron microscopy observation. Histological studies revealed a complex developmental process of morphogenesis including five stages: (1) callus originated from cell division in both cambial and cortical regions; type I—yellow compact callus with densely arranged clumps was identified as embryogenic callus. (2) pre-nodular structure consisted of organization center (a central area of vascularization surrounded by meristematic cell layers) and an epidermis-like layer; (3) independent MNs comprised of organization center, a cortical-like area of parenchymatous cells and an epidermal-like area; (4) nodular clusters displayed vigorously internal meristematic cell division and generated a relative movement towards the nodules periphery, establishing vascular connection with primordia; (5) successive new elongated shoots with axillary bud primordia were developed. SEM observations showed three types of extracellular matrix, a smooth membranous layer, fibrillar structures and granular mucilage-like secretions on embryogenic callus, demonstrating its dynamic morphological changes. Ultrastructural analysis revealed striking changes of chloroplast morphology and starch content during MNs morphogenesis. This study allows a better understanding of in vitro regeneration via MN culture and provides references for protocol optimization and genetic transformation.