Arteriogenesis or collateral growth is able to compensate for the stenosis of major arteries. Using differential display RT-PCR on growing and quiescent collateral arteries in a rabbit femoral artery ligation model, we cloned the rabbit full-length cDNA of osteoglycin/mimecan. Osteoglycin was present in the adventitia of collateral arteries as a glycosylated protein without keratan sulfate side chains, mainly produced by smooth muscle cells (SMCs) and perivascular fibroblasts. Northern blot, Western blot, and immunohistochemistry confirmed a collateral artery-specific downregulation of osteoglycin from 6 h to 3 weeks after the onset of arteriogenesis. Treatment of primary SMCs with the arteriogenic protein fibroblast growth factor-2 (FGF-2) resulted in a similar reduction of osteoglycin expression as observed in vivo. Application of the FGF-2 inhibitor polyanethole sulfonic acid (PAS) blocked the downregulation of osteoglycin and interfered with arteriogenesis. From our study we conclude that downregulation of osteoglycin is a fundamental requirement for proper arteriogenesis.