Smooth muscle cell (SMC) proliferation plays a key role in vascular proliferative disorders. The molecular mechanisms that control cell cycle entry of SMCs in response to vascular injury are not well understood. Id2 (inhibitor of DNA binding) is a member of the helix-loop-helix (HLH) family of transcription regulators that are known to promote cell cycle progression. Thus, we investigated the role of Id2 in SMC growth and cell cycle regulation. The results demonstrated that overexpression of Id2 resulted in a significant enhancement of SMC growth via increased S-phase entry. A possible mechanism of Id2-enhanced SMC growth is via regulation of p21 expression, as overexpression of Id2-inhibited transcriptional activity of a 2.3-kb p21 promoter/luciferase reporter construct as well as p21 protein levels. Id2 enhancement of SMC growth and inhibition of p21 expression were dependent on phosphorylation of Id2 by cyclin E/cdk2, as an Id2 cDNA containing a mutation in the cdk2 phosphorylation site (serine 5) failed to regulate SMC cell cycle progression or p21 promoter activity. The mechanism of cyclin E/cdk2 control of the Id2 effect may in part involve regulation of nuclear transport; unlike wild-type Id2, the Id2 mutant was not transported to the nucleus. Finally, in a rat carotid model of arterial injury, Id2 was expressed in a temporal pattern that parallels the kinetics of cellular proliferation. In summary, these results provide evidence that the Id2 protein is integrated into the cell cycle regulatory cascade that results in SMC proliferation following vascular injury and suggest that this effect is at least in part via a cdk2-dependent inhibition of p21 gene expression.