Smooth muscle cells (SMCs) display dynamic plasticity by changing phenotype under various pathophysiological conditions. Uncovering how SMCs regulate their phenotype is a key to understanding the molecular mechanisms of a number of gastrointestinal diseases. MicroRNAs (miRNAs), generated in cells by Dicer, have been identified as regulators of the differentiation state of SMCs. The goal of this study was to investigate the role of miRNAs during the development of gastrointestinal SMCs in a transgenic animal model. We generated SMC-specific Dicer (smDicer) null animals that express the reporter, green fluorescence protein (eGFP), in a SMC-specific manner. eGFP labeled SMCs were used for morphological, cytometric and genetic studies of smDicer null mutant and wild type control mice. The structure of the bowel wall was examined by confocal microscopy, and function was evaluated by recording spontaneous and evoked contractions. SMCs were purified with fluorescence-activated cell sorting and SM specific gene expression studies were performed with genechip arrays, PCR and quantitative PCR. Bioinformatic analyses were used to characterize the interaction between miRNAs and target genes. SMC-specific knockout of Dicer prevented SMC miRNA biogenesis, causing dramatic changes in phenotype, function, and global gene expression in SMCs. Profiling and bioinformatic analyses showed SMC phenotype is regulated by a complex network of positive and negative feedback by SM miRNAs, serum response factor (SRF), and other transcriptional factors. SM miRNAs play an important role in growth, development and survival of SMCs. Phenotypic changes of SMCs may be regulated through multiple pathways in an interaction network of SM miRNAs, SRF, and additional transcriptional factors.