The outer tissues of dicotyledonous plant roots (i.e. epidermis, cortex, and endodermis) are clearly organized in distinct concentric layers in contrast to the diarch to polyarch vascular tissues of the central stele. Up to now, the outermost layer of the stele, the pericycle, has always been regarded, in accordance with the outer tissue layers, as one uniform concentric layer. However, considering its lateral root-forming competence, the pericycle is composed of two different cell types, with one subset of cells being associated with the xylem, showing strong competence to initiate cell division, whereas another group of cells, associated with the phloem, appears to remain quiescent. Here, we established, using detailed microscopy and specific Arabidopsis thaliana reporter lines, the existence of two distinct pericycle cell types. Analysis of two enhancer trap reporter lines further suggests that the specification between these two subsets takes place early during development, in relation with the determination of the vascular tissues. A genetic screen resulted in the isolation of mutants perturbed in pericycle differentiation. Detailed phenotypical analyses of two of these mutants, combined with observations made in known vascular mutants, revealed an intimate correlation between vascular organization, pericycle fate, and lateral root initiation potency, and illustrated the independence of pericycle differentiation and lateral root initiation from protoxylem differentiation. Taken together, our data show that the pericycle is a heterogeneous cell layer with two groups of cells set up in the root meristem by the same genetic pathway controlling the diarch organization of the vasculature.