Phosphorylation of a cluster of amino acids in the serum response factor (SRF) “MADS box” αI coil DNA binding domain regulated the transcription of genes associated with proliferation or terminal muscle differentiation. Mimicking phosphorylation of serine-162, a target of protein kinase C-α, with an aspartic acid substitution (SRF-S162D) completely inhibited SRF–DNA binding and blocked α-actin gene transcription even in the presence of potent myogenic cofactors, while preserving c-fos promoter activity because of stabilization of the ternary complex via Elk-1. Introduction of SRF-S162D into SRF null ES cells permitted transcription of the c-fos gene but was unable to rescue expression of myogenic contractile genes. Transition of proliferating C2C12 myoblasts to postfusion myocytes after serum withdrawal was associated with a progressive decline in SRF-S162 phosphorylation and an increase in α-actin gene expression. Hence, the phosphorylation status of serine-162 in the αI coil may constitute a novel switch that directs target gene expression into proliferation or differentiation programs.