Pericytes isolated from the bovine retinal microvasculature retain characteristic features of their in vivo counterparts, such as the presence of glycogen deposits, long filamentous processes, prominent microfilament bundles and the ability to display two distinct and reversible phenotypes. Time-lapse video-microscopy demonstrated that pericytes tend to overlap and aggregate, even in sparse cultures. After reaching confluence, they form multilayered areas that retract away from each other, resulting in the formation of multicellular nodules. These nodules increase in size and cellularity by going through repeated 5- to 6-h cycles of anchoring, spreading, cell proliferation and retraction. Alkaline phosphatase was not detected in pericytes at subconfluent or confluent densities, but this enzyme was expressed in areas of high cell density, such as multilayers and nodules. Pericytes synthesise and deposit an extracellular matrix at all stages of their in vitro development, including nodule formation. The matrix within the nodules contains cross-striated collagen fibres and matrix vesicles. Needle-like crystals of hydroxyapatite appear to be deposited within the matrix, thus leading to massive calcification of the nodule. Calcification, as assessed by electron microscopy, histochemical staining and X-ray microprobe analysis, occurred on plastic and collagen substrata in the absence of disodium-βkglycerophosphate. The addition of this compound at 5 or 10 mM or the use of a collagen substratum (rather than plastic), brought forward the process of nodule formation and calcification by 3–6 days. Our results suggest that retinal pericytes may differentiate in vitro along the osteogenic pathway.