Recent observations suggest that the outer layer of blood vessel walls, the adventitia, exhibits properties of a stem/progenitor cell niche. Stem cell antigen-1 (Sca1)/CD34-positive progenitor cells have been isolated from the adventitia of both murine and human arteries and veins with potentials to form smooth muscle cells (SMCs), pericytes, macrophages, osteogenic cells and adipocytes. These progenitors cluster at or near the border zone between the outer media and inner adventitia. In the mouse this border zone region corresponds to a localized site of sonic hedgehog (Shh) signaling in the artery wall. The onset of Shh signaling corresponds to termination of SMC layer formation in developing arteries and the appearance of adventitial Sca1-positive (AdvSca1) cells around E15.5. Shh acts as a mitogen and survival factor for AdvSca1 cells ex vivo and many fewer Sca1-positive cells are found in the adventitia of Shh-null embryos in vivo. AdvSca1 cells form pericytes and macrophages in matrigel implant angiogenesis assays in vivo. The role of AdvSca1 cells in growth, remodeling and disease of blood vessels and surrounding tissues will be discussed.