Transforming growth factor-β family cytokines have diverse actions in the maintenance of cardiac homeostasis. Follistatin-like 3 (Fstl3) is an extracellular regulator of certain TGF-β family members, including activin A. The aim of this study was to examine the role of Fstl3 in cardiac hypertrophy. Cardiac myocyte-specific Fstl3 knock-out (KO) mice and control mice were subjected to pressure overload induced by transverse aortic constriction (TAC). Cardiac hypertrophy was assessed by echocardiography and histological and biochemical methods. KO mice showed reduced cardiac hypertrophy, pulmonary congestion, concentric LV wall thickness, LV dilatation, and LV systolic dysfunction after TAC compared with control mice. KO mice displayed attenuated increases in cardiomyocyte cell surface area and interstitial fibrosis following pressure overload. Although activin A was similarly up-regulated in KO and control mice after TAC, a significant increase in Smad2 phosphorylation only occurred in KO mice. Knockdown of Fstl3 in cultured cardiomyocytes inhibited PE-induced cardiac hypertrophy. Conversely, adenovirus-mediated Fstl3 overexpression blocked the inhibitory action of activin A on hypertrophy and Smad2 activation. Transduction with Smad7, a negative regulator of Smad2 signaling, blocked the antihypertrophic actions of activin A stimulation or Fstl3 ablation. These findings identify Fstl3 as a stress-induced regulator of hypertrophy that controls myocyte size via regulation of Smad signaling.