CADASIL (Cerebral Autosomal Dominant Arteriopathy with Sub-cortical Infarcts and Leukoencephalopathy) is the most common form of genetic stroke and vascular dementia syndrome resulting from mutations in NOTCH3. To elucidate molecular mechanisms of the condition and identify drug targets, we established a patient-specific induced pluripotent stem cell (iPSC) model and demonstrated for the first time a failure of the patient iPSC-derived vascular mural cells (iPSC-MCs) in engaging and stabilising endothelial capillary structures. The patient iPSC-MCs had reduced PDGFRβ, decreased secretion of the angiogenic factor VEGF, were highly susceptible to apoptotic insults, and could induce apoptosis of adjacent endothelial cells. Supplementation of VEGF significantly rescued the capillary destabilisation. SiRNA knockdown of NOTCH3 in iPSC-MCs revealed a gain-of-function mechanism for the mutant NOTCH3. These disease mechanisms likely delay brain repair after stroke in CADASIL, contributing to the brain hypoperfusion and dementia in this condition, and will help to identify potential drug targets.