Differentiation of lung vascular smooth muscle cells (vSMCs) is tightly regulated during development or in response to challenges in a vessel specific manner. Aberrant vSMCs specifically associated with distal pulmonary arteries have been implicated in the pathogenesis of respiratory diseases, such as pulmonary arterial hypertension (PAH), a progressive and fatal disease, with no effective treatment. Therefore, it is highly relevant to understand the underlying mechanisms of lung vSMC differentiation. miRNAs are known to play critical roles in vSMC maturation and function of systemic vessels; however, little is known regarding the role of miRNAs in lung vSMCs. Here, we report that miR-29 family members are the most abundant miRNAs in adult mouse lungs. Moreover, high levels of miR-29 expression are selectively associated with vSMCs of distal vessels in both mouse and human lungs. Furthermore, we have shown that disruption of miR-29 in vivo leads to immature/synthetic vSMC phenotype specifically associated with distal lung vasculature, at least partially due to the derepression of KLF4, components of the PDGF pathway and ECM-related genes associated with synthetic phenotype. Moreover, we found that expression of FBXO32 in vSMCs is significantly upregulated in the distal vasculature of miR-29 null lungs. This indicates a potential important role of miR-29 in smooth muscle cell function by regulating FBXO32 and SMC protein degradation. These results are strongly supported by findings of a cell autonomous role of endogenous miR-29 in promoting SMC differentiation in vitro. Together, our findings suggested a vessel specific role of miR-29 in vSMC differentiation and function by targeting several key negative regulators.