The conversion of angiotensin I (AT-I) to angiotensin II (AT-II) by angiotensin I-converting enzyme (ACE) is a key step in the action of angiotensins. ACE is constitutively expressed in endothelial cells, but can also be detected at low levels in smooth muscle cells (SMC). Furthermore, in rats the ACE activity can be induced in SMC in vivo by experimental hypertension or vascular injury and in vivo by corticoid treatment. This study was therefore undertaken to evaluate the conversion of AT-I and its subsequent effects in SMC in basal conditions and after stimulation by dexamethasone. Using rat and human SMC, showed that dexamethasone induced ACE expression and that this enzyme was functional, leading to AT-II-dependent intracellular signaling. A fourfold increase in phospholipase C activity in response to AT-I was observed in dexamethasone-activated SMC compared with quiescent SMC. This effect of dexamethasone on signal transduction is dependent on ACE activity, whereas AT-II receptor parameters remain unchanged. The action of AT-I was blocked by an AT1 receptor antagonist, suggesting that it was mediated by AT-II. Similarly, dexamethasone-induced ACE expression was present in human SMC, and calcium signaling was mobilized in response to AT-I in activated human cells. Experiments performed with cocultures of endothelial cells and SMC in a Transwell system showed that the response to AT-I was limited to the compartment where AT-I was localized, suggesting that AT-I does not pass through the endothelial cell barrier to interact with underlying SMC. Our data suggest that in rat, as in human SMC, the conversion of AT-I into AT-II and the signal transduction in response to AT-I are ACE expression-dependent. In addition, the present findings show that this SMC response to AT-I is endothelium-independent, supporting the idea of a local generation of AT-II in the vascular wall.