The existing models of the dynamics of ultrasound contrast agents (UCAs) have largely been focused on an UCA surrounded by an infinite liquid. Preliminary investigations of a microbubble's oscillation in a rigid tube have been performed using linear perturbation, under the assumption that the tube diameter is significantly larger than UCA size. In the potential application of drug and gene delivery, it may be desirable to fragment the agent shell within small blood vessels and in some cases to rupture the vessel wall, releasing drugs and genes at the site. The effect of a compliant small blood vessel on the UCA's oscillation and the microvessel's acoustic response are unknown. The aim of this work is to propose a lumped-parameter model to study the interaction of a microbubble oscillation and compliable microvessels. Numerical results demonstrate that in the presence of UCAs, the transmural pressure through the blood vessel substantially increases and thus the vascular permeability is predicted to be enhanced. For a microbubble within an 8 to 40 micron vessel with a peak negative pressure of 0.1MPa and a center frequency of 1MHz, small changes in the microbubble oscillation frequency and maximum diameter are observed. When the ultrasound pressure increases, strong nonlinear oscillation occurs, with an increased circumferential stress on the vessel. For a compliable vessel with the range of diameters considered in this work, 0.2 MPa PNP at 1 MHz is predicted to be sufficient for microbubble fragmentation regardless the vessel diameter, however, for a rigid vessel 0.5 MPa PNP at 1 MHz may not be sufficient to fragment the bubbles. For a center frequency of 1MHz, a peak negative pressure of 0.5 MPa is predicted to be sufficient to exceed the stress threshold for vascular rupture in a small (diameter less than 15 μm) compliant vessel. As the vessel or surrounding tissue becomes more rigid, the UCA oscillation and vessel dilation decrease, however the circumferential stress is predicted to increase. Decreasing the vessel size or the center frequency increases the circumferential stress. For the two frequencies considered in this work, the circumferential stress does not scale as the inverse of the square root of the acoustic frequency v a as in the Mechanical Index, but rather has a stronger frequency dependence, 1/v a .