The malignant potential of smooth muscle tumors correlates strongly with the disappearance of gamma-smooth muscle isoactin, a lineage-specific marker of smooth muscle development. In this paper, we identify a 36-base pair regulatory motif containing an AT-rich domain, CArG box, and a non-canonical NK-2 homeodomain-binding site that has the capacity to regulate smooth muscle-specific gene expression in cultured intestinal smooth muscle cells. Serum-response factor associates with an NK-2 transcription factor via protein-protein interactions and binds to the core CArG box element. Our studies suggest that the NK-2 transcription factor that associates with serum-response factor during smooth muscle differentiation is Nkx2-3. Myocyte-specific enhancer factor 2 binding to this regulatory complex was also observed but limited to uterine smooth muscle tissues. Smooth muscle neoplasms displayed altered transcription factor binding when compared with normal myometrium. Differential nuclear accessibility of serum-response factor protein during smooth muscle differentiation and neoplastic transformation was also observed. Thus, we have identified a unique regulatory complex whose differential binding properties and nuclear accessibility are associated with modulating gamma-smooth muscle isoactin-specific gene expression in both normal and neoplastic tissues.