ABSTRACT: Neointimal hyperplasia, stimulated by injury and certain vascular diseases, promotes artery obstruction and tissue ischemia. In vascular smooth muscle cell (VSMCs), multiple modulators of protein handling machinery regulate intimal hyperplasia. These include elements of the VSMC unfolded protein response to endoplasmic reticulum stress (UPRER), and transglutaminase 2 (TG2), which catalyzes post-translational protein modification. Previous results for deficiency of UPRER-specific mediator XBP1, and of TG2, have been significant, but in multiple instances contradictory, for effects on cultured VSMC function, and, using multiple models, for neointimal hyperplasia in vivo. Here, we engineered VSMC-specific deficiency of XBP1, and studied cultured VSMCs, and neointimal hyperplasia in response to carotid artery ligation in vivo. Intimal area almost doubled in Xbp1fl/fl SM22?-CRE+ mice 21 days post-ligation. Cultured murine Xbp1 deficient VSMCs migrated more in response to platelet derived growth factor (PDGF) than control VSMCs, and had an increased level of inositol-requiring enzyme 1? (Ire1?), a PDGF receptor-binding UPRER transmembrane endonuclease whose substrates include XBP1. Cultured XBP1-deficient VSMCs demonstrated decreased levels of TG2 protein, in association with increased TG2 polyubiquitination, but with increased TG transamidation catalytic activity. Moreover, IRE1?, and TG2-specific transamidation cross-links were increased in carotid artery neointima in Xbp1fl/fl SM22?-CRE+ mice. Cultured TG2-deficient VSMCs had decreased XBP1 associated with increased IRE1?, and increased migration in response to PDGF. Neointimal hyperplasia also was significantly increased in Tgm2fl/fl SM22?-CRE+ mice at 21 days after carotid ligation. In conclusion, a VSMC regulatory circuit between XBP1 and TG2 limits neointimal hyperplasia in response to carotid ligation.