Alteration in the differentiated state of smooth muscle cells (SMCs) is known to be integral to vascular development and the pathogenesis of vascular disease. However, it is still largely unknown how environmental cues translate into transcriptional control of SMC genes. We found that deltaEF1 is upregulated during SMC differentiation and selectively transactivates the promoters of SMC differentiation marker genes, SM alpha-actin and SM myosin heavy chain (SM-MHC). DeltaEF1 physically interacts with SRF and Smad3, resulting in a synergistic activation of SM alpha-actin promoter. Chromatin immunoprecipitation assays and knockdown experiments showed that deltaEF1 is involved in the control of the SMC differentiation programs induced by TGF-beta signaling. Overexpression of deltaEF1 inhibited neointima formation and promoted SMC differentiation, whereas heterozygous deltaEF1 knockout mice exhibited exaggerated neointima formation. It thus appears deltaEF1 mediates SMC differentiation via interaction with SRF and Smad3 during development and in vascular disease.