The aim of this study was to identify the mechanisms by which angiotensin II alters the physiology of the pericyte-containing microvasculature of the retina. Despite evidence that this vasoactive signal regulates capillary perfusion by inducing abluminal pericytes to contract and thereby microvascular lumens to constrict, little is known about the events linking angiotensin exposure with pericyte contraction. Here, using microvessels freshly isolated from the adult rat retina, we monitored pericyte currents via perforated-patch pipettes, measured pericyte calcium levels with fura-2 and visualized pericyte contractions and lumen constrictions by time-lapse photography. We found that angiotensin activates nonspecific cation (NSC) and calcium-activated chloride channels; the opening of these channels induces a depolarization that is sufficient to activate the voltage-dependent calcium channels (VDCCs) expressed in the retinal microvasculature. Associated with these changes in ion channel activity, intracellular calcium levels rise, pericytes contract and microvascular lumens narrow. Our experiments revealed that an influx of calcium through the NSC channels is an essential step linking the activation of AT(1) angiotensin receptors with pericyte contraction. Although not required in order for angiotensin to induce pericytes to contract, calcium entry via VDCCs serves to enhance the contractile response of these cells. In addition to activating nonspecific cation, calcium-activated chloride and voltage-dependent calcium channels, angiotensin II also causes the functional uncoupling of pericytes from their microvascular neighbours. This inhibition of gap junction-mediated intercellular communication suggests a previously unappreciated complexity in the spatiotemporal dynamics of the microvascular response to angiotensin II.