Myostatin, a member of the transforming growth factor-beta (TGF-beta) superfamily, has been shown to be a negative regulator of myogenesis. Here we show that myostatin functions by controlling the proliferation of muscle precursor cells. When C(2)C(12) myoblasts were incubated with myostatin, proliferation of myoblasts decreased with increasing levels of myostatin. Fluorescence-activated cell sorting analysis revealed that myostatin prevented the progression of myoblasts from the G(1)- to S-phase of the cell cycle. Western analysis indicated that myostatin specifically up-regulated p21(Waf1, Cip1), a cyclin-dependent kinase inhibitor, and decreased the levels and activity of Cdk2 protein in myoblasts. Furthermore, we also observed that in myoblasts treated with myostatin protein, Rb was predominately present in the hypophosphorylated form. These results suggests that, in response to myostatin signaling, there is an increase in p21 expression and a decrease in Cdk2 protein and activity thus resulting in an accumulation of hypophosphorylated Rb protein. This, in turn, leads to the arrest of myoblasts in G(1)-phase of cell cycle. Thus, we propose that the generalized muscular hyperplasia phenotype observed in animals that lack functional myostatin could be as a result of deregulated myoblast proliferation.