Activins and inhibins, structurally related members of the TGF-beta superfamily of growth and differentiation factors, are mutually antagonistic regulators of reproductive and other functions. Activins bind specific type II receptor serine kinases (ActRII or IIB) to promote the recruitment and phosphorylation of the type I receptor serine kinase, ALK4 (refs 7-9), which then regulates gene expression by activating Smad proteins. Inhibins also bind type II activin receptors but do not recruit ALK4, providing a competitive model for the antagonism of activin by inhibin. Inhibins fail to antagonize activin in some tissues and cells, however, suggesting that additional components are required for inhibin action. Here we show that the type III TGF-beta receptor, betaglycan, can function as an inhibin co-receptor with ActRII. Betaglycan binds inhibin with high affinity and enhances binding in cells co-expressing ActRII and betaglycan. Inhibin also forms crosslinked complexes with both recombinant and endogenously expressed betaglycan and ActRII. Finally, betaglycan confers inhibin sensitivity to cell lines that otherwise respond poorly to this hormone. The ability of betaglycan to facilitate inhibin antagonism of activin provides a variation on the emerging roles of proteoglycans as co-receptors modulating ligand-receptor sensitivity, selectivity and function.