The periosteum serves as bone's bounding membrane, exhibits hallmarks of semipermeable epithelial barrier membranes, and contains mechanically sensitive progenitor cells capable of generating bone. The current paucity of data regarding the periosteum's permeability and bidirectional transport properties provided the impetus for the current study. In ovine femur and tibia samples, the periosteum's hydraulic permeability coefficient, k, was calculated using Darcy's Law and a custom-designed permeability tester to apply controlled, volumetric flow of phosphate-buffered saline through periosteum samples. Based on these data, ovine periosteum demonstrates mechanically responsive and directionally dependent (anisotropic) permeability properties. At baseline flow rates comparable to interstitial fluid flow (0.5 µL/s), permeability is low and does not exhibit anisotropy. In contrast, at high flow rates comparable to those prevailing during traumatic injury, femoral periosteum exhibits an order of magnitude higher permeability compared to baseline flow rates. In addition, at high flow rates permeability exhibits significant directional dependence, with permeability higher in the bone to muscle direction than vice versa. Furthermore, compared to periosteum in which the intrinsic tension (pre-stress) is maintained, free relaxation of the tibial periosteum after resection significantly increases its permeability in both flow directions. Hence, the structure and mechanical stress state of periosteum influences its role as bone's bounding membrane. During periods of homeostasis, periosteum may serve as a barrier membrane on the outer surface of bone, allowing for equal albeit low quiescent molecular communication between tissue compartments including bone and muscle. In contrast, increases in pressure and baseline flow rates within the periosteum resulting from injury, trauma, and/or disease may result in a significant increase in periosteum permeability and consequently in increased molecular communication between tissue compartments. Elucidation of the periosteum's permeability properties is key to understanding periosteal mechanobiology in bone health and healing, as well as to elucidate periosteum structure and function as a smart biomaterial that allows bidirectional and mechanically responsive fluid transport.