Myostatin is a transforming growth factor-β family member that acts as a negative regulator of skeletal muscle mass. To identify possible myostatin inhibitors that may have applications for promoting muscle growth, we investigated the regulation of myostatin signaling. Myostatin protein purified from mammalian cells consisted of a noncovalently held complex of the N-terminal propeptide and a disulfide-linked dimer of C-terminal fragments. The purified C-terminal myostatin dimer was capable of binding the activin type II receptors, Act RIIB and, to a lesser extent, Act RIIA. Binding of myostatin to Act RIIB could be inhibited by the activin-binding protein follistatin and, at higher concentrations, by the myostatin propeptide. To determine the functional significance of these interactions in vivo, we generated transgenic mice expressing high levels of the propeptide, follistatin, or a dominant-negative form of Act RIIB by using a skeletal muscle-specific promoter. Independent transgenic mouse lines for each construct exhibited dramatic increases in muscle mass comparable to those seen in myostatin knockout mice. Our findings suggest that the propeptide, follistatin, or other molecules that block signaling through this pathway may be useful agents for enhancing muscle growth for both human therapeutic and agricultural applications.