Vascular pericytes undergo osteogenic differentiation in vivo and in vitro and may, therefore, be involved in diseases involving ectopic calcification and osteogenesis. The purpose of this study was to identify factors that inhibit the entry of pericytes into this differentiation pathway. RNA was prepared from pericytes at confluence and after their osteogenic differentiation (mineralized nodules). Subtractive hybridization was conducted on polyA PCR-amplified RNA to isolate genes expressed by confluent pericytes that were downregulated in the mineralized nodules. The subtraction product was used to screen a pericyte cDNA library and one of the positive genes identified was Axl, the receptor tyrosine kinase. Northern and Western blotting confirmed that Axl was expressed by confluent cells and was downregulated in mineralized nodules. Western blot analysis demonstrated that confluent pericytes also secrete the Axl ligand, Gas6. Immunoprecipitation of confluent cell lysates with an anti-phosphotyrosine antibody followed by Western blotting using an anti-Axl antibody, demonstrated that Axl was active in confluent pericytes and that its activity could not be further enhanced by incubating the cells with recombinant Gas6. The addition of recombinant Axl-extracellular domain (ECD) to pericyte cultures inhibited the phosphorylation of Axl by endogenous Gas6 and enhanced the rate of nodule mineralization. These effects were inhibited by coincubation of pericytes with Axl-ECD and recombinant Gas6. Together these results demonstrate that activation of Axl inhibits the osteogenic differentiation of vascular pericytes.