Endothelial and smooth muscle cells normally exist in a quiescent differentiated state. After injury to the vessel, these cells dedifferentiate, migrate, and proliferate as needed for repair. In culture on plastic, both endothelial and smooth muscle cells exhibit the dedifferentiated phenotype. We have found that laminin and reconstituted basement membrane proteins (Matrigel) induce a very rapid cessation of endothelial cell proliferation followed by alignment and subsequent reorganization into tubelike structures. We have also found that smooth muscle cells in culture exhibit a differentiated phenotype when exposed to Matrigel. The molecular mechanisms involved in smooth muscle differentiation resemble those of skeletal muscle, in which proliferation and differentiation appear to be mutually exclusive states controlled by both positive and negative transcriptional regulators. The dedifferentiated smooth muscle cells produce proteases and exhibit a migratory and invasive phenotype capable of destroying normal tissue architecture. These studies suggest that the modulation of endothelial and smooth muscle cells between a differentiated and dedifferentiated phenotype is regulated by extracellular matrix components as well as by cytokines. Model systems such as those described here should allow the identification of molecular events controlling the differentiation of vascular cells and facilitate the development of therapeutic agents that maintain healthy vessels.