We recently reported that transforming growth factor (TGF)- induced the neural crest stem cell line Monc-1 to differentiate into a spindle-like contractile smooth muscle cell (SMC) phenotype and that Smad signaling played an important role in this phenomenon. In addition to Smad signaling, other pathways such as mitogenactivated protein kinase (MAPK), phosphoinositol-3 kinase, and RhoA have also been shown to mediate TGF- actions. The objectives of this study were to examine whether these signaling pathways contribute to TGF--induced SMC development and to test whether Smad signaling cross-talks with other pathway(s) during SMC differentiation induced by TGF-. We demonstrate here that RhoA signaling is critical to TGF--induced SMC differentiation. RhoA kinase (ROCK) inhibitor Y27632 significantly blocks the expression of multiple SMC markers such as smooth muscle ␣-actin, SM22␣, and calponin in TGF--treated Monc-1 cells. In addition, Y27632 reversed the cell morphology and abolished the contractility of TGF--treated cells. RhoA signaling was activated as early as 5 min following TGF- addition. Dominant negative RhoA blocked nuclear translocation of Smad2 and Smad3 because of the inhibition of phosphorylation of both Smads and inhibited Smaddependent SBE promoter activity, whereas constitutively active RhoA significantly enhanced SBE promoter activity. Consistent with these results, C3 exotoxin, an inhibitor of RhoA activation, significantly attenuated SBE promoter activity and inhibited Smad nuclear translocation. Taken together, these data point to a new role for RhoA as a modulator of Smad activation while regulating TGF--induced SMC differentiation.