Follistatin (FS) is an important regulator of pituitary FSH secretion through its potent ability to bind and bioneutralize activin. It also represents a prototype for binding proteins that control bioavailability of other TGFbeta-related growth factors such as the bone morphogenetic proteins. The 288-residue FS molecule has a distinctive structure comprised principally of three 10-cysteine FS domains. These are preceded by an N-terminal segment shown by us previously to contain hydrophobic residues essential for activin binding. To establish the contribution of the FS domains themselves to FS's bioactivity, we prepared mutants with deleted or exchanged domains and intradomain point mutations. Mutants were expressed from mammalian (Chinese hamster ovary) cells and evaluated for activin binding and for biological activity in assays measuring differing aspects of FS bioactivity: activin-mediated transcriptional activity and suppression of FSH secretion in primary pituitary cell cultures. The N-terminal domain (residues 1-63) alone could not bind activin or suppress activin-mediated transcription, either alone or combined in solution with the FS domain region (residues 64-288). Deletion of FS domains 1 or 2 abolished activin binding and biological activity in both assays, whereas deletion of domain 3 was tolerated. Bioactivity was also reduced or eliminated after exchange of domains (FS 2/1/3 and FS 3/1/2) or doubling of domain 1 (FS 1/1/3) or domain 2 (FS 2/2/3). Several hydrophobic residues clustered within the C-terminal region of FS domains 1 and 2 are highly conserved among all FS domains. Mutation of any of these to Asp or Ala either reduced or eliminated FS bioactivity and disrupted distant epitopes for heparin binding (FS domain 1) or antibody recognition (FS domain 2), suggesting their role in maintaining the conformational integrity of the domain and possibly the FS molecule as a whole. These results are consistent with the importance of domain conformation as well as the overall order of the domains in FS function. A continuous sequence comprising the N-terminal domain and followed by FS domains 1 and 2 fulfills the minimum structural requirement for activin binding and FS bioactivity.