Smooth muscle cells arise from different populations of precursor cells during embryonic development. The mechanisms that specify the smooth muscle cell phenotype in each of these populations of cells are largely unknown. In many tissues and organs, homeodomain transcription factors play a key role in directing cell specification. However, little is known about how these proteins regulate smooth muscle differentiation. Using degenerate reverse transcription-PCR coupled to cDNA library screening we identified two homeodomain proteins, Hoxa10 and Hoxb8, which are expressed in adult mouse smooth muscle tissues. All three of the previously described transcripts of the Hoxa10 gene, Hoxa10-1, Hoxa10-2, and Hoxa10-3, were identified. Hoxa10-1 directly activated the smooth muscle-specific telokin promoter but did not activate the SM22alpha, smooth muscle alpha-actin, or smooth muscle myosin heavy chain promoters. Small interfering RNA-mediated knock-down of Hoxa10-1 demonstrated that Hoxa10-1 is required for high levels of telokin expression in smooth muscle cells from uterus and colon. On the other hand, Hoxb8 inhibited the activity of the telokin, SM22alpha, and smooth muscle alpha-actin promoters. Cotransfection of Hoxa10-1 together with Hoxa10-2 or Hoxb8 suggested that Hoxa10-2 and Hoxb8 act as competitive inhibitors of Hoxa10-1. Results from gel mobility shift assays demonstrated that Hoxa10-1, Hoxa10-2, and Hoxb8 bind directly to multiple sites in the telokin promoter. Mutational analysis of telokin promoter reporter genes demonstrated that the three homeodomain protein binding sites located between -80 and -75, +2 and +6, and +14 and +17 were required for maximal promoter activation by Hoxa10-1 and maximal inhibition by Hoxb8. Together these data demonstrate that the genes encoding smooth muscle-restricted proteins are direct transcriptional targets of clustered homeodomain proteins and that different homeodomain proteins have distinct effects on the promoters of these genes.