We recently reported that the first detectable expression of SMC-specific proteins during coronary smooth muscle cell (CoSMC) differentiation from isolated proepicardial cells was restricted to cells undergoing epithelial-to-mesenchymal transformation (EMT). The objectives of this study were to examine more closely the relation between actin cytoskeletal rearrangements and serum response factor (SRF)-dependent transcription, and to specifically test whether rhoA-GTPase signaling is required for CoSMC differentiation. We report here that PDGF-BB stimulates EMT and promotes SRF-dependent expression of SMC marker genes calponin, SM22alpha, and SMgamma(actin) (SMgammaA) in proepicardial cells. C3 exoenzyme or rhoGDI, inhibitors of rhoA signaling, blocked PDGF-BB-induced EMT, prevented actin reorganization into stress fibers, and inhibited CoSMC differentiation. Incubation with the selective p160 rho-kinase (p160RhoK) inhibitor Y27632 (RKI) blocked EMT, prevented the appearance of calponin and SMgammaA-positive cells, and abolished expression and nuclear localization of SRF. To test the role of RhoK signaling for CoSMC differentiation in vivo, quail proepicardial organs (PEOs) were pretreated with RKI or vehicle and then grafted into age-matched host chick embryos to produce a chimeric epicardium. The ability of grafted cells to participate in coronary vessel formation was monitored by staining with antibodies for quail cell nuclear antigen and SMC marker proteins. Proepicardial cells pretreated with RKI failed to form CoSMCs in vivo. Time course studies traced this deficiency to a failure of epicardial-derived mesenchymal cells to migrate into or survive within the myocardium. In summary, these data point to important roles for rhoA-RhoK signaling in molecular pathways controlling cytoskeletal reorganization, SRF-dependent transcription, and cell survival that are required to produce CoSMCs from proepicardial cells.