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Human vascular wall-resident CD44+ multipotent stem cells (VW-MPSCs) within the vascular adventitia are capable to differentiate into pericytes and smooth muscle cells (SMC). This study demonstrates HOX-dependent differentiation of CD44(+) VW-MPSCs into SMC that involves epigenetic modification of transgelin as a down-stream regulated gene. First, HOXB7, HOXC6 and HOXC8 were identified to be differentially expressed in VW-MPSCs as compared to terminal differentiated human aortic SMC, endothelial cells and undifferentiated pluripotent embryonic stem cells. Silencing these HOX genes in VW-MPSCs significantly reduced their sprouting capacity and increased expression of the SMC markers transgelin and calponin and the histone gene histone H1. Furthermore, the methylation pattern of the TAGLN promoter was altered. In summary, our findings suggest a role for certain HOX genes in regulating differentiation of human VW-MPSC into SMCs that involves epigenetic mechanisms. This is critical for understanding VW-MPSC-dependent vascular disease processes such as neointima formation and tumor vascularization.