Activin, a member of the TGF-beta superfamily, regulates the growth and differentiation of a variety of cell types. Based on the expression of activin in pancreatic rudiments of rat embryos and stimulation of insulin secretion from adult rat pancreatic islets by activin, activin is implicated in the development and function of islets. To examine the significance of activin signaling in the fetal and postnatal development of islets, transgenic mice expressing a dominant negative form of activin receptor (dn-ActR) or a constitutively active form of activin receptor (ActR-T206D) in islets were generated together with the transgenic mice expressing intact activin receptor (intact ActR) as a negative control. Transgenic mice with both dn-ActR and ActR-T206D showed lower survival rates, smaller islet area, and lower insulin content in the whole pancreas with impaired glucose tolerance when compared with transgenic mice with intact ActR or littermates, but they showed the same alpha cell/beta cell ratios as their littermates. In addition to islet hypoplasia, the insulin response to glucose was severely impaired in dn-ActR transgenic mice. It is suggested that a precisely regulated intensity of activin signaling is necessary for the normal development of islets at the stage before differentiation into alpha and beta cells, and that activin plays a role in the postnatal functional maturation of islet beta cells.