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Abstract Background Little is known about endogenous inhibitors of angiogenic growth factors. In this study, we identified a novel endogenous anti-angiogenic factor expressed in pericytes and clarified its underlying mechanism and clinical significance. Methods Herein, we found Kai1 knockout mice showed significantly enhanced angiogenesis. Then, we investigated the anti-angiogenic roll of Kai1 in vitro and in vivo. Results KAI1 was mainly expressed in pericytes rather than in endothelial cells. It localized at the membrane surface after palmitoylation by zDHHC4 enzyme and induced LIF through the Src/p53 pathway. LIF released from pericytes in turn suppressed angiogenic factors in endothelial cells as well as in pericytes themselves, leading to inhibition of angiogenesis. Interestingly, KAI1 had another mechanism to inhibit angiogenesis: It directly bound to VEGF and PDGF and inhibited activation of their receptors. In the two different in vivo cancer models, KAI1 supplementation significantly inhibited tumor angiogenesis and growth. A peptide derived from the large extracellular loop of KAI1 has been shown to have anti-angiogenic effects to block the progression of breast cancer and retinal neovascularization in vivo. Conclusions KAI1 from PC is a novel molecular regulator that counterbalances the effect of angiogenic factors.