During embryogenesis, the NG2 proteoglycan is expressed on immature capillary vessels, but as the vessels mature they lose this expression. NG2 is up‐regulated in high‐grade gliomas, but it is not clear to what extent it contributes to malignant progression. Using a combination of high spatial and temporal resolution functional magnetic resonance imaging and histopathological analyses, we show here that overexpression of NG2 increases tumor initiation and growth rates, neovascularization, and cellular proliferation, which predisposes to a poorer survival outcome. By confocal microscopy and cDNA gene array expression profiles, we also show that NG2 tumors express lower levels of hypoxia inducible factor‐1α, vascular endothelial growth factor, and endogenous angiostatin in vivo compared with wild‐type tumors. Moreover, we demonstrate that NG2‐positive cells bind, internalize, and coimmunoprecipitate with angiostatin. These results indicate a unique role for NG2 in regulating the transition from small, poorly vascularized tumors to large, highly vascular gliomas in situ by sequestering angiostatin.