Genetic analysis has revealed an important function in myogenesis for Myostatin, a member of the TGF-beta superfamily. However, the cascade of genes that responds to Myostatin signalling to regulate myogenesis is not well understood. Thus, a suppressive subtraction hybridization to identify such genes was undertaken and here we report the cloning and characterization of a novel gene, Mighty. Mighty is expressed in a variety of different tissues but appears to be specifically regulated by Myostatin in skeletal muscle. Overexpression of Mighty in C2C12 cells results in early withdrawal of myoblasts from the cell cycle, enhanced and accelerated differentiation and hypertrophy of myotubes. Most importantly, Mighty overexpression leads to increased and earlier expression of MyoD and increased secretion of another known differentiation inducing factor, IGF-II. Furthermore, viral expression of Mighty in mdx mice resulted in an increase in the number of larger healthy muscle fibers. Given its role in myogenesis, we propose that Mighty is a critical promyogenic factor which plays a key role in the signalling pathway downstream of Myostatin.