The conversion of stromal fibroblasts into contractile myofibroblasts is an essential feature of the wound-healing response that is mediated by transforming growth factor 1 (TGF-1) and accompanied by transient activation of the vascular smooth muscle ␣-actin (Sm␣A) gene. Multiple positive-regulatory elements were identified as essential mediators of basal Sm␣A enhancer activity in mouse AKR-2B stromal fibroblasts. Three of these elements bind transcriptional activating proteins of known identity in fibroblasts. A fourth site, shown previously to be susceptible to single-strand modifying agents in myofibroblasts, was additionally required for enhancer response to TGF-1. However, TGF-1 activation was not accompanied by a stoichiometric increase in protein binding to any known positive element in the Sm␣A enhancer. By using oligonucleotide affinity isolation, DNA-binding site competition, gel mobility shift assays, and protein overexpression in SL2 and COS7 cells, we demonstrate that the transcription factors Sp1 and Sp3 can stimulate Sm␣A enhancer activity. One of the sites that bind Sp1/3 corresponds to the region of the Sm␣A enhancer required for TGF-1 amplification. Additionally, the TGF-1 receptor-regulated Smad proteins, in particular Smad3, are rate-limiting for Sm␣A enhancer activation. Whereas Smad proteins collaborate with Sp1 in activating several stromal cell-associated promoters, they appear to operate independently from the Sp1/3 proteins in activating the Sm␣A enhancer. The identification of Sp and Smad proteins as essential, independent activators of the Sm␣A enhancer provides new insight into the poorly understood process of myofibroblast differentiation.