Mural cells are central to vascular integrity and function. In this study, we demonstrate the innovative use of the transcription factor NKX3.1 to guide the differentiation of human induced pluripotent stem cells into mural progenitor cells (iMPCs). By transiently activating NKX3.1 in mesodermal intermediates, we developed a method that diverges from traditional growth factor-based differentiation techniques. This approach efficiently generates a robust iMPC population capable of maturing into diverse functional mural cell subtypes, including smooth muscle cells and pericytes. These iMPCs exhibit key mural cell functionalities such as contractility, deposition of extracellular matrix, and the ability to support endothelial cell-mediated vascular network formation in vivo. Our study not only underscores the fate-determining significance of NKX3.1 in mural cell differentiation but also highlights the therapeutic potential of these iMPCs. We envision these insights could pave the way for a broader use of iMPCs in vascular biology and regenerative medicine.