BACKGROUND Mesenchymal stem cells are multipotent adult stem cell populations that have broad differentiation plasticity and immunosuppressive potential that render them of great importance in cell-based therapies. They are identified by in vitro characteristics based on their differentiation potential for clinical approaches while their biological properties and in vivo identities are often less understood. METHODS Recent research carried out in the last decade on mesenchymal stem cell biology suggests that mesenchymal stem cells from various tissues reside in a perivascular location and these can be identified as pericytes that function as mural cells in microvessels. RESULTS This review covers recent progress on understanding the link between pericytes and mesenchymal stem cells discussing specific points such as response to injury and tissue-specific functions. CONCLUSIONS Despite a long and controversial history, there is a growing acceptance that perivascular cells are connected with mesenchymal stem cells, all that is really lacking is genetic evidence to show differentiation of pericytes into different cells types.