Chronic kidney disease, defined as loss of kidney function for more than three months, is characterized pathologically by glomerulosclerosis, interstitial fibrosis, tubular atrophy, peritubular capillary rarefaction, and inflammation. Recent studies have identified a previously poorly appreciated, yet extensive population of mesenchymal cells, called either pericytes when attached to peritubular capillaries or resident fibroblasts when embedded in matrix, as the progenitors of scar-forming cells known as myofibroblasts. In response to sustained kidney injury, pericytes detach from the vasculature and differentiate into myofibroblasts, a process not only causing fibrosis, but also directly contributing to capillary rarefaction and inflammation. The interrelationship of these three detrimental processes makes myofibroblasts and their pericyte progenitors an attractive target in chronic kidney disease. In this review, we describe current understanding of the mechanisms of pericyte-to-myofibroblast differentiation during chronic kidney disease, draw parallels with disease processes in the glomerulus, and highlight promising new therapeutic strategies that target pericytes or myofibroblasts. In addition, we describe the critical paracrine roles of epithelial, endothelial, and innate immune cells in the fibrogenic process.