Changes in cell morphology and rearrangements of the actin cytoskeleton are common features accompanying cell transformation induced by various oncogenes. In this study, we show that promyelocytic leukemia zinc finger protein (PLZF) binds to the promoter of smooth muscle α-actin, reducing mRNA and protein levels encoded by this gene and resulting in a reorganization of the actin cytoskeleton. In cultures of chicken embryo fibroblasts (CEF), this effect on α-actin expression is correlated with a change in cellular phenotype from spindle shaped to polygonal and flattened. This morphological change is dependent on Ras function. The polygonal, flattened CEF show a high degree of resistance to the transforming activity of several oncoproteins. Our results support the conclusion that reorganization of the actin cytoskeleton plays an important role in tumor suppression by PLZF.