Serum response factor (SRF) plays a central role in regulating expression of smooth muscle-specific genes partly by associating with the potent tissue-specific cofactor myocardin. Previous studies have shown that transforming growth factor-β1-induced transcript 1 (TGFB1I1, also known as Hic-5) is a TGF-β-responsive gene and is involved in the cellular response to vascular injury, but the regulation of TGFB1I1 expression remains elusive. In this report, we demonstrated that TGFB1I1 is a novel marker for the smooth muscle contractile phenotype and is regulated by SRF/myocardin. We found that TGFB1I1 is specifically expressed in smooth muscle cells (SMCs) and in smooth muscle-rich tissues. Furthermore, TGFB1I1 expression is significantly down-regulated in a variety of models for smooth muscle phenotypic modulation. The TGFB1I1 promoter contains an evolutionarily conserved CArG element, and this element is indispensible for myocardin-induced transactivation of TGFB1I1 promoter. By oligonucleotide pulldown and chromatin immunoprecipitation assays, we found that SRF binds to this CArG element in vitro and in vivo. Ectopic expression of myocardin is sufficient to induce endogenous TGFB1I1 expression in multiple cell lines whereas knocking-down myocardin or SRF significantly attenuated TGFB1I1 expression in SMCs. Furthermore, our data demonstrated that SRF is essential for TGF-β-mediated induction of TGFB1I1. Finally, silencing of TGFB1I1 expression significantly promotes SMC proliferation. Collectively, this study provides the first evidence that TGFB1I1 is not only an SRF/myocardin-regulated smooth muscle marker but also critical for maintaining smooth muscle contractile phenotype by inhibiting smooth muscle proliferation.