The SAP domain transcription factor myocardin plays a critical role in the transcriptional program regulating smooth muscle cell differentiation. In this report, we describe the capacity of myocardin to physically associate with megakaryoblastic leukemia factor-1 (MKL1) and characterize the function of MKL1 in smooth muscle cells (SMCs). The MKL1 gene is expressed in most human tissues and myocardin and MKL are co-expressed in SMCs. MKL1 and myocardin physically associate via conserved leucine zipper domains. Overexpression of MKL1 transactivates serum response factor (SRF)-dependent SMC-restricted transcriptional regulatory elements including the SM22alpha promoter, smooth muscle myosin heavy chain promoter/enhancer, and SM-alpha-actin promoter/enhancer in non-SMCs. Moreover, forced expression of MKL1 and SRF in undifferentiated SRF(-/-) embryonic stem cells activates multiple endogenous SMC-restricted genes at levels equivalent to, or exceeding, myocardin. Forced expression of a dominant-negative MKL1 mutant reduces myocardin-induced activation of the SMC-specific SM22alpha promoter. In NIH3T3 fibroblasts MKL1 localizes to the cytoplasm and translocates to the nucleus in response to serum stimulation, actin treadmilling, and RhoA signaling. In contrast, in SMCs MKL1 is observed exclusively in the nucleus regardless of serum conditions or RhoA signaling. However, when actin polymerization is disrupted MKL1 translocates from the nucleus to the cytoplasm in SMCs. Together, these data were consistent with a model wherein MKL1 transduces signals from the cytoskeleton to the nucleus in SMCs and regulates SRF-dependent SMC differentiation autonomously or in concert with myocardin.