We have previously shown that RhoA-mediated actin polymerization stimulates smooth muscle cell (SMC)-specific transcription by regulating the nuclear localization of the myocardin-related transcription factors (MRTFs). On the basis of the recent demonstration that nuclear G-actin regulates MRTF nuclear export and observations from our laboratory and others that the RhoA effector, mDia2, shuttles between the nucleus and cytoplasm, we investigated whether nuclear RhoA signaling plays a role in regulating MRTF activity. We identified sequences that control mDia2 nuclear-cytoplasmic shuttling and used mDia2 variants to demonstrate that the ability of mDia2 to fully stimulate MRTF nuclear accumulation and SMC-specific gene transcription was dependent on its localization to the nucleus. To test whether RhoA signaling promotes nuclear actin polymerization, we established a fluorescence recovery after photobleaching (FRAP)-based assay to measure green fluorescent protein-actin diffusion in the nuclear compartment. Nuclear actin FRAP was delayed in cells expressing nuclear-targeted constitutively active mDia1 and mDia2 variants and in cells treated with the polymerization inducer, jasplakinolide. In contrast, FRAP was enhanced in cells expressing a nuclear-targeted variant of mDia that inhibits both mDia1 and mDia2. Treatment of 10T1/2 cells with sphingosine 1-phosphate induced RhoA activity in the nucleus and forced nuclear localization of RhoA or the Rho-specific guanine nucleotide exchange factor (GEF), leukemia-associated RhoGEF, enhanced the ability of these proteins to stimulate MRTF activity. Taken together, these data support the emerging idea that RhoA-dependent nuclear actin polymerization has important effects on transcription and nuclear structure.