It is generally accepted that the de-differentiation of smooth muscle cells (SMCs) from contractile to proliferative/synthetic phenotype has an important role during vascular remodeling and diseases. Here we provide evidence that challenges this theory. We identify a new type of multipotent vascular stem cell (MVSC) in blood vessel wall. MVSCs express markers including Sox17, Sox10 and S100β, are cloneable, have telomerase activity, and can differentiate into neural cells and mesenchymal stem cell (MSC)-like cells that subsequently differentiate into SMCs. On the other hand, we use lineage tracing with smooth muscle myosin heavy chain as a marker to show that MVSCs and proliferative or synthetic SMCs do not arise from the de-differentiation of mature SMCs. Upon vascular injuries, MVSCs, instead of SMCs, become proliferative, and MVSCs can differentiate into SMCs and chondrogenic cells, thus contributing to vascular remodeling and neointimal hyperplasia. These findings support a new hypothesis that the differentiation of MVSCs, rather than the de-differentiation of SMCs, contributes to vascular remodeling and diseases.