A unique pattern of LacZ expression was found in a transgenic mouse line, likely due to regulatory elements at the site of integration. Two new genes flanking the transgene were identified. At early stages of development, the transgene is transiently expressed in ventro‐lateral demomyotomal cells migrating from the somites into the limb buds. At late developmental stages and in the adult, lacZ staining marks vascular smooth muscle cells throughout the vascular bed, with the exception of the major elastic arteries, and in pericytes. No expression was detected in skeletal and smooth muscles. Different patterns of expression in vascular smooth muscles was observed at distinct levels of the vascular tree, in arteries as well as in veins. Vessel injury, resulting in stimulation of smooth muscle cells proliferation and migration, is associated with transgene down‐regulation. After the formation of neointima thickening, it is reactivated. This transgenic insertion may therefore be used as a useful marker to identify novel physiological cues or genetic elements involved in the regulation of the vascular smooth muscle phenotype(s). It may also provide an experimental tool for studying vasculature and the involvement of pericytes in regulating microvascular homeostasis. © 2001 Wiley‐Liss, Inc.