We previously reported the importance of the serum response factor (SRF) cofactor myocardin in controlling muscle gene expression as well as the fundamental role for the inflammatory transcription factor NF-kappaB in governing cellular fate. Inactivation of myocardin has been implicated in malignant tumor growth. However, the underlying mechanism of myocardin regulation of cellular growth remains unclear. Here we show that NF-kappaB(p65) represses myocardin activation of cardiac and smooth muscle genes in a CArG-box-dependent manner. Consistent with their functional interaction, p65 directly interacts with myocardin and inhibits the formation of the myocardin/SRF/CArG ternary complex in vitro and in vivo. Conversely, myocardin decreases p65-mediated target gene activation by interfering with p65 DNA binding and abrogates LPS-induced TNF-alpha expression. Importantly, myocardin inhibits cellular proliferation by interfering with NF-kappaB-dependent cell-cycle regulation. Cumulatively, these findings identify a function for myocardin as an SRF-independent transcriptional repressor and cell-cycle regulator and provide a molecular mechanism by which interaction between NF-kappaB and myocardin plays a central role in modulating cellular proliferation and differentiation.