Pericytes, also known as Rouget cells or mural cells, are associated abluminally with all vascular capillaries and post-capillary venules. Differences in pericyte morphology and distribution among vascular beds suggest tissue-specific functions. Based on their location and their complement of muscle cytoskeletal proteins, pericytes have been proposed to play a role in the regulation of blood flow. In vitro studies demonstrating the contractile ability of pericytes support this concept. Pericytes have also been suggested to be oligopotential and have been reported to differentiate into adipocytes, osteoblasts and phagocytes. The mechanisms involved in vessel formation have yet to be elucidated but observations indicate that the primordial endothelium can recruit undifferentiated mesenchymal cells and direct their differentiation into pericytes in microvessels, and smooth muscle cells in large vessels. Communication between endothelial cells and pericytes, or their precursors, may take many forms. Soluble factors such as platelet-derived growth factor and transforming growth factors-beta are likely to be involved. In addition, physical contact mediated by cell adhesion molecules, integrins and gap junctions appear to contribute to the control of vascular growth and function. Development of culture methods has allowed some functions of pericytes to be directly examined. Co-culture of pericytes with endothelial cells leads to the activation of transforming growth factor-beta, which in turn influences the growth and differentiation of the vascular cells. Finally, the pericyte has been implicated in the development of a variety of pathologies including hypertension, multiple sclerosis, diabetic microangiopathy and tumor vascularization.