Activin-betaA and activin-betaB (encoded by Inhba and Inhbb genes, respectively) are closely related TGF-beta superfamily members that participate in a variety of biological processes. We previously generated mice with an insertion allele at the Inhba locus, Inhba(BK). In this allele, the sequence encoding the Inhba mature domain is replaced with that of Inhbb, rendering the gene product functionally hypomorphic. Homozygous (Inhba(BK/BK)) and hemizygous (Inhba(BK/-)) mice are smaller and leaner than their wild-type littermates, and many tissues are disproportionately small relative to total body weight. To determine the mechanisms that contribute to these phenomena, we investigated the metabolic consequences of the mutation. Although the growth of Inhba(BK) mice is improved by providing a calorie-rich diet, diet-induced obesity, fatty liver, and insulin resistance (hallmarks of chronic caloric excess) do not develop, despite greater caloric intake than wild-type controls. Physiological, molecular, and biochemical analyses all revealed characteristics that are commonly associated with increased mitochondrial energy metabolism, with a corresponding up-regulation of several genes that reflect enhanced mitochondrial biogenesis and function. Oxygen consumption, an indirect measure of the metabolic rate, was markedly increased in Inhba(BK/BK) mice, and polarographic analysis of liver mitochondria revealed an increase in ADP-independent oxygen consumption, consistent with constitutive uncoupling of the inner mitochondrial membrane. These findings establish a functional relationship between activin signaling and mitochondrial energy metabolism and further support the rationale to target this signaling pathway for the medical treatment of cachexia, obesity, and diabetes.