Pericytes are perivascular mural cells of brain capillaries. They are positioned centrally in the neurovascular unit between endothelial cells, astrocytes and neurons. This position allows them to regulate key neurovascular functions of the brain. The role of pericytes in the regulation of cerebral blood flow (CBF) and neurovascular coupling remains, however, under debate. Using loss-of-function pericyte-deficient mice, here we show that pericyte degeneration diminishes global and individual capillary CBF responses to neuronal stimuli, resulting in neurovascular uncoupling, reduced oxygen supply to the brain and metabolic stress. Neurovascular deficits lead over time to impaired neuronal excitability and neurodegenerative changes. Thus, pericyte degeneration as seen in neurological disorders such as Alzheimer's disease may contribute to neurovascular dysfunction and neurodegeneration associated with human disease.