Pericytes promote vessel stability and their dysfunction causes pathologies due to blood vessel leakage. Previously, we reported that Olfactomedin-like 3 (Olfml3) is a matricellular protein with proangiogenic properties. Here, we explored the role of Olfml3 in a knockout mouse model engineered to suppress this protein. The mutant mice exhibited vascular defects in pericyte coverage, suggesting that pericytes influence blood vessel formation in an Olfml3-dependent manner. Olfml3-deficient mice exhibited abnormalities in the vasculature causing partial lethality of embryos and neonates. Reduced pericyte coverage was observed at embryonic day 12.5 and persisted throughout development, resulting in perinatal death of 35% of Olfml3-deficient mice. Cultured Olfml3-deficient pericytes exhibited aberrant motility and altered pericyte association to endothelial cells. Furthermore, the proliferative response of Olfml3-/- pericytes upon PDGF-B stimulation was significantly diminished. Subsequent experiments revealed that intact PDGF-B signaling, mediated via Olfml3 binding, is required for pericyte proliferation and activation of downstream kinase pathways. Our findings suggest a model wherein pericyte recruitment to endothelial cells requires Olfml3 to provide early instructive cue and retain PDGF-B along newly formed vessels to achieve optimal angiogenesis.