The aberrant differentiation of pericytes along the adipogenic, chondrogenic, and osteogenic lineages may contribute to the development and progression of several vascular diseases, including atherosclerosis and calcific vasculopathies. However, the mechanisms controlling pericyte differentiation and, in particular, adipogenic and chondrogenic differentiation are poorly defined. Wnt/beta-catenin signaling regulates cell differentiation during embryonic and postnatal development, and there is increasing evidence that it is involved in vascular pathology. Therefore, this study tested the hypothesis that Wnt/beta-catenin signaling regulates the chondrogenic and adipogenic differentiation of pericytes. We demonstrate that pericytes express several Wnt receptors, including LDL receptor-related proteins 5 and 6, and Frizzled 1 to 4 and 7, 8, and 10, and that Wnt/beta-catenin signaling is stimulated by both Wnt3a and LiCl. Furthermore, induction of Wnt/beta-catenin signaling by LiCl enhances chondrogenesis in pericyte pellet cultures in the presence of transforming growth factor-beta3, as demonstrated by increased Sox-9 expression and glycosaminoglycan accumulation into the matrix. In contrast, transduction of pericytes with a recombinant adenovirus encoding dominant-negative T-cell factor-4 (RAd/dnTCF), which blocks Wnt/beta-catenin signaling, inhibited chondrogenesis, leading to reduced Sox-9 and type II collagen expression and less glycosaminoglycan accumulation. Together, these data demonstrate that transforming growth factor-beta3 induces the chondrogenic differentiation of pericytes by inducing Wnt/beta-catenin signaling and T-cell factor-induced gene transcription. Induction of Wnt/beta-catenin signaling also attenuates adipogenic differentiation of pericytes in both pellet and monolayer cultures, as demonstrated by decreased staining with oil red O and reduced peroxisome proliferator-activated receptor gamma2 expression. This effect was negated by transduction of pericytes with RAd/dnTCF. Together, these results demonstrate that Wnt/beta-catenin signaling inhibits adipogenic and enhances chondrogenic differentiation of pericytes.