The crosstalk between cancer cells and the tumor microenvironment has been implicated in cancer progression and metastasis. Fibroblasts and immune cells are widely known to be attracted to and modified by cancer cells. However, the role of pericytes in the tumor microenvironment beyond endothelium stabilization is poorly understood. Here, we report that pericytes promoted colorectal cancer (CRC) cell proliferation, migration, invasion, stemness and chemoresistance in vitro, as well as tumor growth in a xenograft CRC model. We demonstrate that co-culture with human CRC cells induced broad transcriptomic changes in pericytes, mostly associated with TGF-β receptor activation. The prognostic value of a TGF-β response signature in pericytes was analyzed in CRC patient datasets. This signature was found to be a good predictor of CRC relapse. Moreover, in response to stimulation by CRC cells, pericytes expressed high levels of TGF-β1, initiating an autocrine activation loop. Investigation of secreted mediators and underlying molecular mechanisms revealed that IGFBP-3 is a key paracrine factor from activated pericytes affecting CRC cell migration and invasion. In summary, we demonstrate that the interplay between pericytes and CRC cells triggers a vicious cycle which stimulates pericyte cytokine secretion, in turn increasing CRC cell tumorigenic properties. Overall, we provide another example of how cancer cells can manipulate the tumor microenvironment.This article is protected by copyright. All rights reserved.