The aims of this study were to develop a method for deriving purified populations of contractile smooth muscle cells (SMCs) from embryonic stem cells (ESCs) and to characterize their function. Transgenic ESC lines were generated that stably expressed a puromycin-resistance gene under the control of either a smooth muscle alpha-actin (SMalphaAlpha) or smooth muscle-myosin heavy chain (SM-MHC) promoter. Negative selection, either overnight or for 3 days, was then used to purify SMCs from embryoid bodies. Purified SMCs expressed multiple SMC markers by immunofluorescence, immunoblotting, quantitative reverse transcription-polymerase chain reaction, and flow cytometry and were designated APSCs (SMalphaAlpha-puromycin-selected cells) or MPSCs (SM-MHC-puromycin-selected cells), respectively. Both SMC lines displayed agonist-induced Ca(2+) transients, expressed functional Ca(2+) channels, and generated contractile force when aggregated within collagen gels and stimulated with vasoactive agonists, such as endothelin-1, or in response to depolarization with KCl. Importantly, subcutaneous injection of APSCs or MPSCs subjected to 18 hours of puromycin selection led to the formation of teratomas, presumably due to residual contamination by pluripotent stem cells. In contrast, APSCs or MPSCs subjected to prolonged puromycin selection for 3 days did not form teratomas in vivo. These studies describe for the first time a method for generating relatively pure populations of SMCs from ESCs which display appropriate excitation and contractile responses to vasoactive agonists. However, studies also indicate the potential for teratoma development in ESC-derived cell lines, even after prolonged differentiation, highlighting the critical requirement for efficient methods of separating differentiated cells from residual pluripotent precursors in future studies that use ESC derivatives, whether SMC or other cell types, in tissue engineering applications.