Early growth response 2 (Egr2) is a zinc-finger transcription factor that acts as an important modulator of a variety of physiological processes, such as cell differentiation, proliferation and apoptosis. Here we showed that Egr2 was downregulated by bone morphogenetic protein (BMP) signaling pathways during the commitment of C3H10T1/2 stem cells to adipocyte lineage. Overexpression of Egr2 completely prevented BMP4-induced adipocyte lineage commitment of C3H10T1/2 stem cells, while simultaneously stimulating early smooth muscle-like differentiation. We also demonstrated that Egr2-induced early smooth muscle-like differentiation is transforming growth factor β1-independent. Egr2 can activate the transcription of early smooth muscle cell specific genes smooth muscle protein 22α and calponin 1. Together, the results indicated a novel role for Egr2 in repressing adipocyte lineage commitment and promoting early smooth muscle-like cell differentiation.