Follistatin is an activin-binding protein that can act as an activin antagonist in vitro. Follistatin also binds heparin sulfate proteoglycans and may function as a reservoir for activins in vivo. In the mouse, follistatin mRNA is first detected in the deciduum on embryonic day 5.5 and later in the developing hindbrain, somites, vibrissae, teeth, epidermis, and muscle. We have previously shown that follistatin-deficient mice have numerous embryonic defects including shiny, taut skin, growth retardation, and cleft palate leading to death within hours of birth. To further define the roles of follistatin during mammalian reproduction and development, we created gain-of-function mutant mice in which mouse follistatin is overexpressed. The mouse metallothionein (MT)-I promoter was placed upstream of the six-exon mouse follistatin (FS) gene. To distinguish wild-type and transgenic follistatin mRNA, the 3'-untranslated region of the mouse follistatin gene was replaced with the SV40 untranslated and polyA sequences. Three male and two female founder transgenic mice were produced, were fertile, and transmitted the transgene to offspring. Northern blot analysis demonstrated that the transgene mRNA was expressed at varying levels in the livers of offspring from four of five of the transgenic lines and was expressed in the testes in all five lines. In MT-FS line 4, which had the highest expression of the transgene mRNA in the liver, the transgene transcripts were also present in multiple other tissues. Phenotypically, the MT-FS transgenic lines had defects in the testis, ovary, and hair. Mice from MT-FS lines 7 and 10 had slightly decreased testis size, whereas mice from lines 4, 5, and 9 had much smaller testes and shiny, somewhat irregular, fur. Histological analysis of the adult testes from line 5 and 9 males showed variable degrees of Leydig cell hyperplasia, an arrest of spermatogenesis, and seminiferous tubular degeneration leading to infertility. Female transgenic mice from lines 4 and 9 had thin uteri and small ovaries due to a block in folliculogenesis at various stages. Many of the line 9 female mice eventually became infertile, and all of the line 4 female mice were infertile. Suppressed serum FSH levels were seen in only the line 4 transgenic male and female mice, the line with widespread expression of the transgene. Serum FSH levels were not significantly different in gonadectomized wild-type and line 5 transgenic male mice despite high levels of the follistatin transgene mRNA in the liver of these transgenic mice. These results suggest that follistatin exerts its effects at the levels of the gonads and pituitary as a local regulator of activin and possibly other transforming growth factor-beta family members.