In response to various stimuli, vascular smooth muscle cells (SMCs) can de-differentiate, proliferate and migrate in a process known as phenotypic modulation. However, the phenotype of modulated SMCs in vivo during atherosclerosis and the influence of this process on coronary artery disease (CAD) risk have not been clearly established. Using single-cell RNA sequencing, we comprehensively characterized the transcriptomic phenotype of modulated SMCs in vivo in atherosclerotic lesions of both mouse and human arteries and found that these cells transform into unique fibroblast-like cells, termed ‘fibromyocytes’, rather than into a classical macrophage phenotype. SMC-specific knockout of TCF21—a causal CAD gene—markedly inhibited SMC phenotypic modulation in mice, leading to the presence of fewer fibromyocytes within lesions as well as within the protective fibrous cap of the lesions. Moreover, TCF21 expression was strongly associated with SMC phenotypic modulation in diseased human coronary arteries, and higher levels of TCF21 expression were associated with decreased CAD risk in human CAD-relevant tissues. These results establish a protective role for both TCF21 and SMC phenotypic modulation in this disease.