Inhibins and activins are dimeric proteins belonging to the trans- forming growth factor-b superfamily. Follistatin is an activin-binding protein that antagonizes the function of activin via binding to its b-subunits. Previously, we demonstrated that mice deficient in in- hibin develop ovarian and testicular sex cord-stromal tumors of gran- ulosa and Sertoli cell origin, with 100% penetrance as early as 4 weeks of age. Overproduction of activins in the serum directly causes a cachexia-like wasting syndrome that results in lethality of these mice at an early stage after the onset of the tumors. In an independent set of studies, overexpression of mouse follistatin using the mouse me- tallothionein I promoter in transgenic mice led to gonadal defects and eventual infertility, primarily due to local effects of follistatin in these tissues. Activin has a positive growth effect on gonadal tumor cells in culture and directly causes the cancer cachexia-like syndrome in inhibin-deficient mice via interaction with activin receptor type IIA in livers and stomachs. We therefore hypothesized that an activin antagonist such as follistatin can act as a physiological modifier, either locally or via the serum, to block the activin-mediated cancer cachexia-like syndrome in inhibin-deficient mice and/or slow the pro- gression of gonadal cancers in these mice. To test this hypothesis, we generated mice that are homozygous mutant for the inhibin a null allele (i.e. inham1/inham1) and carry the mouse metallothionein I follistatin (MT-FS) transgene. Our results show that gonadal tumors that are histologically similar in most, but not all, cases to the tumors in inhibin-deficient mice develop in these inham1/inham1, MT-FS1 mice. However, inham1/inham1, MT-FS1 mice exhibit a less severe wasting syndrome, lower serum activin levels, and a statistically significant prolonged survival in a number of cases compared with mice deficient in inhibin alone. Thus, follistatin can act as a modulator of tumor growth and the activin-induced cancer cachexia-like syn- drome in inhibin-deficient mice. (Endocrinology 141: 2319 -2327, 2000)