The molecular mechanisms regulating smooth muscle-specific gene expression during smooth muscle development are poorly understood. Myocardin is an extraordinarily powerful cofactor of serum response factor (SRF) that stimulates expression of smooth muscle-specific genes. In an effort to search for proteins that regulate myocardin function, we identified a novel HMG box-containing protein HMG2L1 (high mobility group 2 like 1). We found that HMG2L1 expression is correlated with the smooth muscle cell (SMC) synthetic phenotype. Overexpression of HMG2L1 in SMCs down-regulated smooth muscle marker expression. Conversely, depletion of endogenous HMG2L1 in SMCs increases smooth muscle-specific gene expression. Furthermore, we found HMG2L1 specifically abrogates myocardin-induced activation of smooth muscle-specific genes. By GST pulldown assays, the interaction domains between HMG2L1 and myocardin were mapped to the N termini of each of the proteins. Finally, we demonstrated that HMG2L1 abrogates myocardin function through disrupting its binding to SRF and abolishing SRF-myocardin complex binding to the promoters of smooth muscle-specific genes. This study provides the first evidence of this novel HMG2L1 molecule playing an important role in attenuating smooth muscle differentiation.