Objective. The aim of this study was to characterize and differentiate adipose-derived stem cells (ADSCs) to functional smooth muscle cells (SMCs) as an alternative cell source for bladder engineering. Materials and methods. Rat ADSCs were differentiated into SMCs for 1-6 weeks using induction medium. The changes in contractile genes and protein expression were investigated by real-time polymerase chain reaction, fluorescence-activated cell sorting and Western blot at different time-points. Spontaneous and carbachol-induced contractions of engineered SMC tissue at different stages were investigated to define the optimal duration of induction. Results. ADSCs differentiated into SMCs lost their capacity for expansion and their contractile phenotype, changing to a synthetic phenotype over time. Highest levels of calponin, smoothelin and MyH11 expression were observed in ADSCs induced for 3 weeks. Cells acquired typical SMC morphology when contractile proteins were expressed. However, SMC morphology was lost with reduction of contractile proteins, especially smoothelin and MyH11. The maximal spontaneous and carbachol-induced contraction of differentiated ADSCs was after 3 weeks. Conclusions. This study demonstrates that ADCSs are a suitable cell source for engineering tissues that require functional and contractile SMCs. An induction time of 3 weeks appears to be sufficient for ADSC differentiation to contractile SMCs suitable for urological tissue engineering.