Pericytes regulate microvascular development and maturation through the control of endothelial cell motility, proliferation, and differentiation. The Rho GTPases have recently been described as key regulators of pericyte shape and contractile phenotype by signaling through the actin cytoskeleton in an isoactin-specific manner. In this report, we reveal that Rho GTPase-dependent signal transduction not only influences pericyte shape and contractile potential but also modulates capillary endothelial proliferative status and pericyte-endothelial interactions in vitro. We provide evidence that overexpression of mutant Rho GTPases, but not other Ras-related small GTPases, significantly alters pericyte shape, contractility, and endothelial growth state in microvascular cell co-cultures. In particular, we describe the use of a silicon substrate deformation assay to demonstrate that pericyte contractility is Rho GTP- and Rho kinase-dependent; further, we describe a novel in vitro system for examining pericyte-mediated endothelial growth arrest and show that control pericytes are capable of growth-arresting capillary endothelial cells in a cell contact-dependent manner, whereas pericytes overexpressing dominant-active and -negative Rho GTPase are comparably incompetent. These data strongly suggest that signaling through the pericyte Rho GTPase pathway may provide critical cues to the processes of microvascular stabilization, maturation, and contractility during development and disease.