Angiotensin II (ANG II) inhibits proliferation and induces differentiation through AT2 receptors. However, target genes involved in this process are not well characterized. We studied PC12 cells, a rat pheochromocytoma cell line exclusively expressing AT2 receptors. ANG II attenuated proliferation of PC12 cells without concomitant induction of apoptosis. To identify potential novel genes involved in the antimitogenic actions of ANG II, we performed differential display analysis of PC12 cells after challenge with 10(-7) M ANG II for 6 hours. One identified gene selected for further study that was down-regulated by ANG II in PC12 cells was SM-20. This gene has been previously isolated from vascular smooth muscle cells treated with mitogens by differential hybridization. Recent findings show a homology of SM-20 with enzymes involved in the regulation of hypoxia inducible factor 1. ANG II suppressed mRNA expression of SM-20 in PC12 cells after only 30 minutes, as detected by Northern blotting. This effect was antagonized by an AT2 receptor blocker, but not by losartan. A rabbit polyclonal antibody was generated against a peptide sequence of SM-20 and detected a major band of the predicted size of 40 kd and a second 33-kd band that likely represents a processed form present in mitochondria. Immunohistochemistry revealed a granular staining of the cytoplasm of PC12 cells compatible with a previously described mitochondrial localization of SM-20 protein. Western blots confirmed the down-regulation of SM-20 protein in PC12 cells subsequent to incubation with ANG II. SM-20 transcripts were also reduced by ANG II acting on AT2 receptors in rat glomerular endothelial cells that express both AT1 and AT2 receptors. SM-20 antisense, but not sense, phosphothioate-modified oligonucleotides reduced base-line proliferation of PC12 cells. In contrast, inducible overexpression of SM-20 using the ecdysone system prevented the antiproliferative effects of ANG II in PC12 cells. In summary, our study identified SM-20 as an essential component of ANG II's growth-suppressive effects mediated through AT2 receptors. This gene apparently plays an important role in the regulatory processes determining whether a cell should undergo differentiation, apoptosis, or proliferation.