We recently reported that C-type natriuretic peptide (CNP) occurs in vascular endothelial cells and acts as a vascular-type natriuretic peptide. In the present study, we stimulated the cGMP cascade in proliferating smooth muscle cells (SMCs), in which particulate guanylate cyclase-B, the specific receptor for CNP, is predominantly expressed, by use of an adenovirus encoding rat CNP cDNA (Ad.CNP). In the Ad.CNP-treated cultured SMCs, CNP caused the growth inhibition of SMCs at G, phase with an early increase of p21(CIP1/WAF1) expression and subsequent upregulation of p16(INK4a). The expression of smooth muscle myosin heavy chain-2, which is the molecular marker of highly differentiated SMCs, was reinduced in the Ad,CNP-treated SMCs, The Ad,CNP-treated SMCs also reexpressed particulate guanylate cyclase-A, which shows high affinity to atrial and brain natriuretic peptide and is exclusively expressed in well-differentiated SMCs. CNP, which was overexpressed in rabbit femoral arteries in vivo at the time of balloon injury, significantly suppressed neointimal formation. Furthermore, an enhancement of the expression of smooth muscle myosin heavy chain-2 occurred in the residual neointima. In addition, early regeneration of endothelial cells was observed in the Ad.CNP-infected group. Thus, stimulation of cGMP cascade in proliferating dedifferentiated SMCs can induce growth inhibition and redifferentiation of SMCs with accelerated reendothelialization.