We have developed a model system for studying angiogenesis in which microvascular fragments and myofibroblasts (Mf) isolated from lipid tissues are grown in co-culture. We have found that Mf induce capillary formation by producing an endothelial cell growth factor and by secreting an extracellular matrix that causes endothelial cells to form a cordlike structure. This system appeared to be well suited for examining the effects of vasoactive substances such as the TNF and INF-γ on capillary growth. TNF-α,β and IFN-γ not only significantly inhibited capillary growth induced by Mf, but also blocked capillary development induced by fibroblast growth factors (FGF), well-known potent angiogenic factors. Recently, we have found that platelet-derived growth factor (PDGF) enhances in vitro capillary formation, probably at least in part by acting on Mf. Just as with FGF, capillary growth in the presence of PDGF was almost completely blocked by IFN-γ. We examined the mode by which IFN-γ inhibits angiogenesis and found that IFN-γ inhibits both the proliferation of endothelial cells and collagen(s) synthesis by Mf. These actions of TNF or IFN-γ could limit vascular formation in solid tumors.