Pericytes are closely associated with endothelial cells, contribute to vascular stability and represent a potential source of mesenchymal progenitor cells. Using the specifically expressed annexin A5-LacZ fusion gene (Anxa5-LacZ), it became possible to isolate perivascular cells (PVC) from mouse tissues. These cells proliferate and can be cultured without undergoing senescence for multiple passages. PVC display phenotypic characteristics of pericytes, as they express pericyte-specific markers (NG2-proteoglycan, desmin, alphaSMA, PDGFR-beta). They also express stem cell marker Sca-1, whereas endothelial (PECAM), hematopoietic (CD45) or myeloid (F4/80, CD11b) lineage markers are not detectable. These characteristics are in common with the pericyte-like cell line 10T1/2. PVC also display a phagocytoic activity higher than 10T1/2 cells. During coculture with endothelial cells both cell types stimulate angiogenic processes indicated by an increased expression of PECAM in endothelial cells and specific deposition of basement membrane proteins. PVC show a significantly increased induction of endothelial specific PECAM expression compared to 10T1/2 cells. Accordingly, in vivo grafts of PVC aggregates onto chorioallantoic membranes of quail embryos recruit endothelial cells, get highly vascularized and deposit basement membrane components. These data demonstrate that isolated Anxa5-LacZ(+) PVC from mouse meninges retain their capacity for differentiation to pericyte-like cells and contribute to angiogenic processes.