Serum response factor (SRF) regulates genes involved in cell proliferation, migration, cytoskeletal organization, and myogenesis. Myocardin and myocardin-related transcription factors (MRTFs) act as powerful transcriptional coactivators of SRF in mammalian cells. We describe an MRTF from Drosophila, called DMRTF, which shares high homology with the functional domains of mammalian myocardin and MRTFs. DMRTF forms a ternary complex with and stimulates the activity of Drosophila SRF, which has been implicated in branching of the tracheal (respiratory) system and formation of wing interveins. A loss-of-function mutation introduced into the DMRTF locus by homologous recombination results in abnormalities in tracheal branching similar to those in embryos lacking SRF. Misexpression in wing imaginal discs of a dominant negative DMRTF mutant also causes a diminution of wing interveins, whereas overexpression of DMRTF results in excess intervein tissue, abnormalities reminiscent of SRF loss- and gain-of-function phenotypes, respectively. Overexpression of these DMRTF mutants in mesoderm and in the tracheal system also perturbs mesoderm cell migration and tracheal branching, respectively. We conclude that the interaction of MRTFs with SRF represents an ancient protein partnership involved in cytoplasmic outgrowth and cell migration during development.