Activin signal transduction is regulated through multiple mechanisms. We have identified novel regulatory proteins that control activin functions either intracellularly or extracellularly. As intracellular molecules, PSD-95/Dlg/ZO-1 (PDZ) proteins that specifically associate with activin type II receptors (ActRIIs) were identified. We have named the molecules as activin receptor-interacting proteins (ARIPs). ARIP1 has two WW domains and five PDZ domains, associates not only with ActRIIs but also with Smads, and controls activin functions intracellularly in neuronal cells. Another ARIP we have found has only one PDZ domain, and is likely to be involved in intracellular trafficking and sorting of activin receptor complexes in the cell. As an extracellular regulatory protein, we have identified a novel follistatin-like protein, named follistatin-related gene (FLRG). Like follistatins, FLRG binds activins and bone morphogenetic proteins (BMPs) and controls their functions extracellularly. The mode of association of follistatin and FLRG with activins and their expression patterns are different, suggesting the distinct functions of follistatin and FLRG in vivo.