In this study, we attempted to uncover the functional impact of microRNA-22 (miR-22) and its target gene in smooth muscle cell (SMC) differentiation and delineate the molecular mechanism involved. miR-22 was found to be significantly upregulated during SMC differentiation from embryonic stem cells and adventitia stem/progenitor cells. Enforced expression of miR-22 by its mimic, while knockdown of miR-22 by its antagomiR, promotes or inhibits SMC differentiation from embryonic stem cells and adventitia stem/progenitor cells, respectively. Expectedly, miR-22 overexpression in stem cells promoted SMC differentiation in vivo. Methyl CpG-binding protein 2 (MECP2) was predicted as one of the top targets of miR-22. Interestingly, the gene expression levels of MECP2 were significantly decreased during SMC differentiation, and MECP2 was dramatically decreased in miR-22 overexpressing cells but significantly increased when miR-22 was knockdown in the differentiating stem cells. Importantly, luciferase assay showed that miR-22 substantially inhibited wild-type, but not mutant MECP2-3' untranslated region-luciferase activity. In addition, modulation of MECP2 expression levels affects multiple SMC-specific gene expression in differentiated embryonic stem cells. Mechanistically, our data showed that MECP2 could transcriptionally repress SMC gene expression through modulating various SMC transcription factors, as well as several proven SMC differentiation regulators. Evidence also revealed that enrichment of H3K9 trimethylation around the promoter regions of the SMC differentiation regulators genes were significantly increased by MECP2 overexpression. Finally, miR-22 was upregulated by platelet-derived growth factor-BB and transforming growth factor-β through a transcriptional mechanism during SMC differentiation. miR-22 plays an important role in SMC differentiation, and epigenetic regulation through MECP2 is required for miR-22 mediated SMC differentiation.