Follistatins exert critical autocrine or paracrine control in many tissues by binding and bio-neutralizing activin and several other transforming growth factor-beta ligands. In the pituitary, activin acts locally to induce follistatin expression and thus modulate its own actions. This local feedback loop safeguards against excessive activin signaling and maintains the necessary balance of activin and follistatin tone. To better understand the mechanisms underlying the activation of follistatin by activin A, follistatin transcription was evaluated in gonadotrope-derived alphaT3-1 cells. Transient transfection experiments established that follistatin-luciferase plasmids that incorporate up to 2.86 kb of the upstream region of the rat follistatin gene are not induced by activin A in alphaT3-1 cells. On the other hand, plasmids that incorporate intron 1 are responsive to activin A and induced by a constitutively active form of ALK4. These experiments ultimately identified a conserved Smad-binding element (SBE1) in intron 1, between +1791 and +1795. In alphaT3-1 cells treated with activin A, SBE1 preferentially recruits Smad3, but not Smad2, and mediates Smad3-dependent activation of follistatin transcription. shRNA knockdown of endogenous Smad3 in these cells compromises SBE1-mediated transcription in response to activin A and interferes with its ability to positively regulate follistatin mRNA levels. The findings of the current work illustrate the critical role of intron 1 of the follistatin gene in mediating Smad-dependent effects of activin and regulating the expression level of this gene in some cell types, such as pituitary cells of gonadotrope lineage.