To gain more insight in the mechanism of action of inhibin, we studied the effect of inhibin on activin signaling in Chinese hamster ovary cells. Inhibin specifically counteracted activin-induced expression of a plasminogen activator inhibitor 1 promoter element (3TP) and of the junB gene, but was ineffective when the responses were induced by transforming growth factor-beta. This indicates that inhibin acts only on the activin-specific part of these signaling cascades. Using a constitutively active activin type IB receptor we determined whether inhibin acted at the level of the activin-receptor complex or downstream of it. The mutant activin receptor stimulated the expression of the 3TP promoter in the absence of activin. This stimulation was insensitive to inhibin, indicating that inhibin acts exclusively at or upstream of this activin type I receptor. In addition, competition studies using labeled activin showed that inhibin displaced activin from the activin type II receptors, especially from the activin type IIB receptor, but not from the type I receptors. In conclusion, these data show that in Chinese hamster ovary cells inhibin acts directly at the activin receptor complex, most likely through displacement of activin from the activin type II receptor.