Follistatin-related protein is a recently discovered glycoprotein that is highly homologous in both primary sequence and exon/intron domain structure to the activin-binding protein, follistatin. We explored their potential for functional redundancy by investigating the relative affinities and kinetics of their interactions with activin, bone morphogenic protein-6, and bone morphogenic protein-7 and by exploring their expression and distribution in human tissues and cells. Follistatin and follistatin-related protein mRNA were ubiquitous by Northern analyses, although their sites of peak distribution differed, with follistatin-related protein and follistatin predominating in the placenta and ovary, respectively. Follistatin-related protein, like follistatin, preferentially bound activin with high affinity and in an essentially irreversible fashion. Although follistatin-related protein, like follistatin, possesses a signal sequence and no known nuclear localization signals, its secretion was undetectable in most cell lines by RIA. Intriguingly, follistatin-related protein was identified as a nuclear protein in human granulosa cells and all human cell lines tested. Furthermore, Western analyses of CHO cells transfected with human follistatin-related protein revealed this protein to reside within the insoluble nuclear protein fraction. We conclude that despite its remarkably high level of similarity to follistatin with regard to structure and activin binding kinetics, follistatin-related protein is a nuclear as well as a secretory protein that may perform distinct intracellular actions.