The role of microRNA-1 (miR-1) has been studied in cardiac and skeletal muscle differentiation. However, it remains unexplored in vascular smooth muscle cells (SMCs) differentiation. The aim of this study was to uncover novel targets of and shed light on the function of miR-1 in the context of embryonic stem cell (ESC) differentiation of SMCs in vitro. miR-1 expression is steadily increased during differentiation of mouse ESC to SMCs. Loss-of-function approaches using miR-1 inhibitors uncovered that miR-1 is required for SMC lineage differentiation in ESC-derived SMC cultures, as evidenced by downregulation of SMC-specific markers and decrease of derived SMC population. In addition, bioinformatics analysis unveiled a miR-1 binding site on the Kruppel-like factor 4 (KLF4) 3' untranslated region (3'UTR), in a region that is highly conserved across species. Consistently, miR-1 mimic reduced KLF4 3'UTR luciferase activity, which can be rescued by mutating the miR-1 binding site on the KLF4 3'UTR in the reporter construct. Additionally, repression of the miR-1 expression by miR-1 inhibitor can reverse KLF4 downregulation during ESC-SMC differentiation, which subsequently inhibits SMC differentiation. We conclude that miR-1 plays a critical role in the determination of SMC fate during retinoid acid-induced ESC/SMC differentiation, which may indicate that miR-1 has a role to promote SMC differentiation.