Pericytes are perivascular cells with multifunctional activities which are now being elucidated. The functional interaction of pericytes with endothelial cells (EC) is now being established, using current molecular and cytochemical techniques. The detailed morphology of the pericyte has been well described. Pericytes extend long cytoplasmic processes over the surface of the EC, the two cells making interdigitating contacts. At points of contact, communicating gap junctions, tight junctions and adhesion plaques are present. Pericytes appear to show both structural and functional heterogeneity. The coverage of EC by pericytes varies considerably between different microvessel types and the location of pericytes on the microvessel is not random but appears to be functionally determined. Interaction between pericytes and EC is important for the maturation, remodelling and maintenance of the vascular system via the secretion of growth factors or modulation of the extracellular matrix. There is also evidence that pericytes are involved in the transport across the blood-brain barrier and the regulation of vascular permeability. The long-standing view that pericytes are the microvessel equivalent of larger vessel smooth muscle cells and are contractile is being reassessed using current methods. An important role for pericytes in pathology, and neuropathology in particular, has been indicated in hypertension, diabetic retinopathy, Alzheimer’s disease, multiple sclerosis and CNS tumour formation.