The matricellular protein Follistatin-like 1 (FSTL1) has been shown to negatively regulate bone morphogenetic protein (BMP)/Smad1/5/8 signaling by functioning as an antagonist and has been implicated in physiological and pathological events including organogenesis, immunity and cardiovascular disease. It is therefore an attractive target for potential therapeutic intervention studies. In this study, we established a high-level expression system in Drosophila S2 cells which could produce about 12.5 mg of recombinant murine Follistatin-like 1 protein (rFSTL1) per liter of culture medium. The recombinant protein was then purified to greater than 95% purity using Ni-NTA agarose affinity chromatography followed by HiLoad 16/60 Superdex 200 gel filtration. The biological activity of rFSTL1 was evaluated by its ability to negatively regulate BMP/Smad1/5/8 signaling in cultured mink lung epithelial cells. Furthermore, we crystallized a truncated form of rFSTL1 containing the follistatin-like domain using the sitting drop vapor diffusion method. In conclusion, we have generated and purified biologically active recombinant FSTL1 protein, which will be important for further protein structure and drug discovery studies.