We tested the hypothesis that extracellular lactate regulates the function of pericyte-containing retinal microvessels. Although abluminally positioned pericytes appear to adjust capillary perfusion by contracting and relaxing, knowledge of the molecular signals that regulate the contractility of these mural cells is limited. Here, we focused on lactate because this metabolic product is in the retinal extracellular space under both physiological and pathophysiological conditions. In microvessels freshly isolated from the adult rat retina, we used perforated-patch pipettes to monitor ionic currents, fura-2 to measure calcium levels and time-lapse photography to visualize changes in mural cell contractility and lumen diameter. During lactate exposure, pericyte calcium rose; these cells contracted, and lumens constricted. This contractile response appears to involve a cascade of events resulting in the inhibition of Na⁺/Ca²⁺ exchangers (NCXs), whose decreased function causes pericyte calcium to increase and contraction to be triggered. Based on our observation that gap junction uncouplers minimized the lactate-induced rise in pericyte calcium, we propose that the NCXs inhibited by lactate are predominately located in the endothelium. Indicative of the importance of endothelial/pericyte gap junctions, uncouplers of these junctions switched the pericyte response to lactate from contraction to relaxation. In addition, we observed that hypoxia, which closes microvascular gap junctions, also switched the effect of lactate from vasocontraction to vasorelaxation. Thus, the response of pericyte-containing retinal microvessels to extracellular lactate is metabolically modulated. The ability of lactate to serve as a vasoconstrictor when energy supplies are ample and a vasodilator under hypoxic conditions may be an efficient mechanism to link capillary function with local metabolic need.