Extensive evidence indicates that serum response factor (SRF) regulates muscle-specific gene expression and that the myocardin family SRF co-factors are critical for smooth muscle cell (SMC) differentiation. In a yeast-two-hybrid screen for novel SRF binding partners expressed in aortic SMC, we identified Four and a Half LIM domain protein 2 (FHL2) and confirmed this interaction by GST pull-down and co-immunoprecipitation assays. FHL2 also interacted with all three myocardin factors and enhanced myocardin and MRTF-A-dependent transactivation of the SM -actin, SM22, and cardiac ANF promoters in 10T1/2 cells. Expression of FHL2 increased myocardin and MRTF-A protein levels, and importantly, this effect was due to an increase in protein stability not due to an increase in myocardin factor mRNA expression. Treatment of cells with the proteasome inhibitors, MG132 and lactacystin, strongly up-regulated endogenous MRTF-A protein levels and resulted in a substantial increase in ubiquitin immunoreactivity in MRTF-A immunoprecipitants. Interestingly, expression of FHL2 attenuated the effects of RhoA and MRTF-B on promoter activity perhaps through decreased MRTF-B nuclear localization or decreased SRF-CArG binding. Taken together, these data indicate that the myocardin factors are regulated by proteasome-mediated degradation and that FHL2 regulates SRF-dependent transcription by multiple mechanisms including stabilization of myocardin and MRTF-A.