Smooth muscle cells are of key importance for the proper functioning of different visceral organs including those of the urogenital system. In the mouse ureter, the two transcriptional regulators TSHZ3 and SOX9 are independently required for initiation of smooth muscle differentiation from uncommitted mesenchymal precursor cells. However, it has remained unclear whether TSHZ3 and SOX9 act independently or as part of a larger regulatory network. Here, we set out to characterize the molecular function of TSHZ3 in the differentiation of the ureteric mesenchyme. Using a yeast-two-hybrid screen, we identified SOX9 as an interacting protein. We show that TSHZ3 also binds to the master regulator of the smooth muscle program, MYOCD, and displaces it from the coregulator SRF, thereby disrupting the activation of smooth muscle specific genes. We found that the initiation of the expression of smooth muscle specific genes in MYOCD-positive ureteric mesenchyme coincides with the down regulation of Sox9 expression, identifying SOX9 as a possible negative regulator of smooth muscle cell differentiation. To test this hypothesis, we prolonged the expression of Sox9 in the ureteric mesenchyme in vivo. We found that Sox9 does not affect Myocd expression but significantly reduces the expression of MYOCD/SRF-dependent smooth muscle genes, suggesting that down-regulation of Sox9 is a prerequisite for MYOCD activity. We propose that the dynamic expression of Sox9 and the interaction between TSHZ3, SOX9 and MYOCD provide a mechanism that regulates the pace of progression of the myogenic program in the ureter.