The change in vascular smooth muscle cells (SMC) from a differentiated to a dedifferentiated state is the critical phenotypic response that promotes occlusive arteriosclerotic disease. Despite its importance, research into molecular mechanisms regulating smooth muscle differentiation has been hindered by the lack of an in vitro cell differentiation system. We identified culture conditions that promote efficient differentiation of Monc-1 pluripotent neural crest cells into SMC. Exclusive Monc-1 to SMC differentiation was indicated by cellular morphology and time-dependent induction of the SMC markers smooth muscle alpha-actin, smooth muscle myosin heavy chain, calponin, SM22alpha, and APEG-1. The activity of the SM22alpha promoter was low in Monc-1 cells. Differentiation of these cells into SMC caused a 20-30-fold increase in the activity of the wild-type SM22alpha promoter and that of a hybrid promoter containing three copies of the CArG element. By gel mobility shift analysis, we identified new DNA-protein complexes in nuclear extracts prepared from differentiated Monc-1 cells. One of the new complexes contained serum response factor. This Monc-1 to SMC model should facilitate the identification of nodal regulators of smooth muscle development and differentiation.