Extensive evidence indicates that serum response factor (SRF) regulates muscle-specific gene expression and that myocardin family SRF cofactors are critical for smooth muscle cell 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 coimmunoprecipitation assays. FHL2 also interacted with all three myocardin factors and enhanced myocardin and myocardin-related transcription factor (MRTF)-A-dependent transactivation of smooth muscle alpha-actin, SM22, and cardiac atrial natriuretic factor promoters in 10T1/2 cells. The 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 proteasome inhibitors MG-132 and lactacystin strongly upregulated endogenous MRTF-A protein levels and resulted in a substantial increase in ubiquitin immunoreactivity in MRTF-A immunoprecipitants. Interestingly, the 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 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.