Sphingosine 1-phosphate (S1P) is a lipid agonist that regulates smooth muscle cell (SMC) and endothelial cell functions by activating several members of the S1P subfamily of G-protein-coupled Edg receptors. We have shown previously that SMC differentiation is regulated by RhoA-dependent activation of serum response factor (SRF). Because S1P is a strong activator of RhoA, we hypothesized that S1P would stimulate SMC differentiation. Treatment of primary rat aortic SMC cells with S1P activated RhoA as measured by precipitation with a glutathione S-transferase-rhotekin fusion protein. In SMC and 10T1/2 cells, S1P treatment up-regulated the activities of several transiently transfected SMC-specific promoters, and these effects were inhibited by the Rho-kinase inhibitor, Y-27632. S1P also increased smooth muscle alpha-actin protein levels in SMC but had no effect on SRF binding to the smooth muscle alpha-actin CArG B element. Quantitative reverse transcriptase-PCR showed that S1P treatment of SMC or 10T1/2 cells did not increase the mRNA level of either of the recently identified SRF co-factors, myocardin or myocardin-related transcription factor-A (MRTF-A). MRTF-A protein was expressed highly in SMC and 10T1/2 cultures, and importantly the effects of S1P were inhibited by a dominant negative form of MRTF-A indicating that S1P may regulate the transcriptional activity of MRTF-A. Indeed, S1P treatment increased the nuclear localization of FLAG-MRTF-A, and the effect of MRTF-A overexpression on smooth muscle alpha-actin promoter activity was inhibited by dominant negative RhoA. S1P also stimulated SMC growth by activating the early growth response gene, c-fos. This effect was not attenuated by Y-27632 but could be inhibited by the MEK inhibitor, UO126. S1P enhanced SMC growth through ERK-mediated phosphorylation of the SRF co-factor, Elk-1, as measured by gel shift and Elk-1 activation assays. Taken together these results demonstrate that S1P activates multiple signaling pathways in SMC and regulates proliferation by ERK-dependent activation of Elk-1 and differentiation by RhoA-dependent activation of MRTF-A.