While the concept of pericyte heterogeneity in the brain microvasculature is becoming more widely accepted, little is known about how they arise, or their functional contributions to the blood-brain barrier (BBB). We therefore set out to examine the distribution of subtypes of pericytes at the BBB and sought to elucidate some of their functional characteristics by examining their unique mRNA expression patterns. We demonstrate that type-1 pericytes (PC1) that are associated with young healthy brains and BBB homeostasis, can transition into type-2 pericytes (PC2) that are associated with disease and BBB breakdown, both in vitro and in vivo, in the presence of both endogenous and disease associated ligands. We identified PC1 and PC2 in single-cell RNA-sequencing from vascular enriched mouse brain and identified transcriptional differences between PC1 and PC2. PC2 showed increased expression of genes associated with phagocytosis and peripheral immune cell infiltration. On the contrary, PC1 displayed increased expression of genes involved in hedgehog signaling, which is known to promote tight junction formation at the BBB. Our data support the PC1-to-PC2 transition as an origin of PC diversity and suggest a functional role for PC1 in maintaining BBB homeostasis and PC2 in responding to pathological conditions.