The presence of immature smooth muscle cells and ectopic tissues such as fully-formed bone in atherosclerotic lesions, may result from recapitulation of embryonic mechanisms in the artery wall. We hypothesized that expression of homeobox genes is triggered in atherogenesis and that these regulate proliferation and differentiation of multipotential progenitor cells along one or more specific lineages. We identified expression of the homeobox gene HOXB7 in clones of bovine aortic medial cells previously shown to be multipotent. HOXB7 was subsequently detected in human atherosclerotic plaques by RT-PCR and in situ hybridization. Expression was localized to areas adjacent to calcification and scattered in media and neointima, which may be reflective of a role in either osteoblastic or smooth muscle cell differentiation. To differentiate between these possibilities, we overexpressed HOXB7 in C3H10T1/2 cells, a multipotent cell line able to differentiate into vascular smooth muscle cells (SMC), as well as osteogenic and chondrogenic lineages. Results showed that overexpression of HOXB7 increased proliferation 3.5-fold, and induced an SMC-like cell morphology. In addition, expression of the early SMC markers calponin and SM22␣ increased 4-fold and 3-fold respectively by semi-quantitative RT-PCR. Expression of the intermediate SMC marker smooth muscle myosin heavy chain (SM-MHC) did not change. No increase in osteogenic or chondrogenic differentiation was detected, neither in the C3H10T1/2 cells nor in M2 cells, a bone marrow stromal cell line used to confirm this result. These findings suggest that HOXB7 plays a role in expansion of immature cell populations or dedifferentiation of mature cells.