Extracellular ATP is released from activated platelets and endothelial cells and stimulates proliferation of vascular smooth muscle cells (VSMC). We found that ATP stimulates a profound but transient activation of protein kinase A (PKA) via purinergic P2Y receptors. The specific inhibition of PKA by adenovirus-mediated transduction of the PKA inhibitor (PKI) attenuates VSMC proliferation in response to ATP, suggesting a positive role for transient PKA activation in VSMC proliferation. By contrast, isoproterenol and forskolin, which stimulate a more sustained PKA activation, inhibit VSMC growth as expected. On the other hand, the activity of serum response factor (SRF) and the SRF-dependent expression of smooth muscle (SM) genes, such as SM-alpha-actin and SM22, are extremely sensitive to regulation by PKA, and even transient PKA activation by ATP is sufficient for their downregulation. Analysis of the dose responses of PKA activation, VSMC proliferation, SRF activity, and SM gene expression to ATP, with or without PKI overexpression, suggests the following model for the phenotypic modulation of VSMC by ATP, in which the transient PKA activation plays a critical role. At low micromolar doses, ATP elicits a negligible effect on DNA synthesis but induces profound SRF activity and SM gene expression, thus promoting the contractile VSMC phenotype. At high micromolar doses, ATP inhibits SRF activity and SM gene expression and promotes VSMC growth in a manner dependent on transient PKA activation. Transformation of VSMC by high doses of ATP can be prevented and even reversed by inhibition of PKA activity.