FOLLISTATIN, an activin-binding protein and activin antagonist in vitro(1,2), can bind to heparan sulphate proteoglycans(3) and may function in vivo to present activins to their receptors. In the mouse, follistatin messenger RNA is first detected in the deciduum (on embryonic day 5.5), and later in the developing hindbrain, somites, vibrissae, teeth, epidermis and muscle(4-11). In Xenopus laevis, overexpression of follistatin leads to induction of neural tissue(12). Here we use loss-of-function mutant mice to investigate the function of follistatin in mammals. We find that follistatin-deficient mice are retarded in their growth, have decreased mass of the diaphragm and intercostal muscles, shiny taut skin, skeletal defects of the hard palate and the thirteenth pair of ribs, their whisker and tooth development is abnormal, they fail to breathe, and die within hours of birth. These defects are more widespread than those seen in activin-deficient mutant mite, indicating that follistatin may modulate the actions of several members of the transforming growth factor-beta family.