Vessel-like networks are quickly formed in subcutaneous FGF2-supplemented Matrigel plugs by two cell types: NG2(+) pericytes and F4/80(+) macrophages. Although not detected in these networks until 7 days after plug implantation, the appearance of CD31(+) endothelial cells marks the onset of vessel perfusion and the establishment of mature vessel morphology, with endothelial cells invested tightly by pericytes and more loosely by macrophages. Evidence that mature vessels develop from pericyte/macrophage networks comes from experiments in which 5-day plugs are transplanted into EGFP(+) recipients and allowed to mature. Fewer than 5% of pericytes in mature vessels are EGFP(+) in this paradigm, demonstrating their presence in the networks prior to plug transplantation. Endothelial cells represent the major vascular cell type recruited during later stages of vessel maturation. Bone marrow transplantation using EGFP(+) donors establishes that almost all macrophages and more than half of the pericytes in Matrigel vessels are derived from the bone marrow. By contrast, only 10% of endothelial cells exhibit a bone marrow origin. The vasculogenic, rather than angiogenic, nature of this neovascularization process is unique in that it is initiated by pericyte and macrophage progenitors, with endothelial cell recruitment occurring as a later step in the maturation process.