Myostatin, a member of the TGF-β superfamily, is shown to inhibit myoblast differentiation by down-regulating MyoD expression. In vitro, increasing concentrations of recombinant mature myostatin reversibly blocked the differentiation of myoblasts cultured in low serum media. Western and Northern blot analysis indicated that myostatin repressed the levels of MyoD, Myf5, myogenin, and p21, leading to the inhibition of myogenic differentiation. The transient transfection of C2C12 myoblasts with MyoD-expressing constructs did not rescue myostatin-inhibited myogenic differentiation. Myostatin signaling specifically induced Smad 3 phosphorylation and increased Smad 3/MyoD association, suggesting that Smad 3 may mediate the myostatin signal by interfering with MyoD activity and expression. Dominant-negative Smad3 rescued the activity of a MyoD promoter-reporter in C2C12 myoblasts treated with myostatin. These results suggest that myostatin inhibits MyoD activity and expression via Smad 3, leading to the failure of myoblasts to differentiate into myotubes. Thus, myostatin plays a critical role in myogenic differentiation, and the muscular hyperplasia and hypertrophy seen in animals lacking functional myostatin are due to deregulated proliferation and differentiation of myoblasts.Myostatin, a member of the TGF-β superfamily, is shown to inhibit myoblast differentiation by down-regulating MyoD expression. In vitro, increasing concentrations of recombinant mature myostatin reversibly blocked the differentiation of myoblasts cultured in low serum media. Western and Northern blot analysis indicated that myostatin repressed the levels of MyoD, Myf5, myogenin, and p21, leading to the inhibition of myogenic differentiation. The transient transfection of C2C12 myoblasts with MyoD-expressing constructs did not rescue myostatin-inhibited myogenic differentiation. Myostatin signaling specifically induced Smad 3 phosphorylation and increased Smad 3/MyoD association, suggesting that Smad 3 may mediate the myostatin signal by interfering with MyoD activity and expression. Dominant-negative Smad3 rescued the activity of a MyoD promoter-reporter in C2C12 myoblasts treated with myostatin. These results suggest that myostatin inhibits MyoD activity and expression via Smad 3, leading to the failure of myoblasts to differentiate into myotubes. Thus, myostatin plays a critical role in myogenic differentiation, and the muscular hyperplasia and hypertrophy seen in animals lacking functional myostatin are due to deregulated proliferation and differentiation of myoblasts.