Bone marrow cells (BMC) are critical to the expansion of the tumor vessel network that supports Ewing sarcoma growth. BMCs migrate to the tumor and differentiate into endothelial cells and pericytes. We recently demonstrated that stromal-derived growth factor 1α (SDF-1α) regulates platelet-derived growth factor B (PDGF-B) and that this pathway plays a critical role in bone marrow-derived pericyte differentiation in vitro. We investigated the role of SDF-1α/PDGF-B in the tumor microenvironment in vivo in promoting bone marrow-derived pericyte differentiation in Ewing tumors. The CXCR4 antagonist AMD 3100 was used to disrupt the SDF-1α/CXCR4 axis in vivo in two xenograft Ewing tumor models. BMCs from GFP(+) transgenic mice were transplanted into lethally irradiated nude mice to track BMC migration to the tumor site. Following BMC engraftment, tumor-bearing mice received daily subcutaneous injections of either PBS or AMD 3100 for 3 weeks. Tumors were resected and tumor sections were analyzed by immunohistochemistry. AMD 3100 inhibited BMC differentiation into desmin(+) and NG2(+) pericytes, affected the morphology of the tumor vasculature, decreased perfusion, and increased tumor cell apoptosis. We observed smaller vessels with tiny lumens and a decrease in the microvessel density. AMD 3100 also inhibited PDGF-B protein expression in vitro and in vivo. SDF-1α in the tumor microenvironment plays a critical role in promoting pericyte formation and Ewing sarcoma tumor neovascularization by regulating PDGF-B expression. Interfering with this pathway affects tumor vascular morphology and expansion.