To elucidate the role of cellular repressor of E1A-stimulated genes (CREG) in the phenotype modulation of vascular smooth muscle cells (VSMCs), human CREG (hCREG) was overexpressed in primary rat VSMCs was using a mammalian expression vector pRC/CMV-hCREG. Transient transfection of VSMCs with hCREG inhibited cell proliferation and DNA synthesis as evidenced by decrease in BrdU incorporation. Moreover, CREG overexpression increased SM α-actin protein level in VSMCs. Co-transfection of VSMCs with SM α-actin promoter reporter gene with hCREG enhanced SM α-actin promoter activity, suggesting that elevated SM α-actin protein production resulted from increased gene transcription. The mechanism by which CREG regulates VSMC phenotype conversion was further investigated by analysis of interaction of CREG with serum response factor (SRF), an important transcriptional factor involved in VSMC differentiation. CREG co-immunoprecipitated with SRF and CREG overexpression increased the SRF bound to CREG. In addition, gel mobility shift assay and supershift assay showed that CREG bound together with SRF to the CArG site of SM α-actin promoter. These results suggest that CREG acts as a transcriptional factor and interacts with SRF to promote VSMC differentiation.