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Embryoid bodies (EB) are sensitive to changes in the culture conditions. Recent studies show that the addition of PEG 300 to culture medium affects cell growth and differentiation; however, its effect on the embryoid body is unclear. This study aims to understand the role of PEG 300 in the process of EB formation and germ layer differentiation. EBs formed more efficiently and differentiated toward the mesoderm when cultured in a medium supplemented with appropriate concentrations of PEG 300. The expression of T/Bry, a marker of mesodermal differentiation, increases in EBs in the PEG group, and the expression of TUBB3 generally decreases, showing a quantitative relationship with PEG. Furthermore, further differentiation of PEG‐pretreated EB into vascular smooth muscle cells (VSMCs) by directional induction shows that PEG 300‐pretreated induced VSMCs have higher expression of phenotypic markers and greater secretory and contractile functions. This study highlights the role of PEG 300 in the culture medium during EB differentiation, which can significantly enhance mesodermal gene expression and the efficiency of subsequent differentiation into smooth muscle cells and other target cells. [ABSTRACT FROM AUTHOR]