Myostatin, a muscle-specific transforming growth factor-β (TGF-β), negatively regulates skeletal muscle mass. The N-terminal prodomain of myostatin noncovalently binds to and suppresses the C-terminal mature domain (ligand) as an inactive circulating complex. However, which region of the myostatin prodomain is required to inhibit the biological activity of myostatin has remained unknown. We identified a 29-amino acid region that inhibited myostatin-induced transcriptional activity by 79% compared with the full-length prodomain. This inhibitory core resides near the N-terminus of the prodomain and includes an α-helix that is evolutionarily conserved among other TGF-β family members, but suppresses activation of myostatin and growth and differentiation factor 11 (GDF11) that share identical membrane receptors. Interestingly, the inhibitory core co-localized and co-immunoprecipitated with not only the ligand, but also its type I and type II membrane receptors. Deletion of the inhibitory core in the full-length prodomain removed all capacity for suppression of myostatin. A synthetic peptide corresponding to the inhibitory core (p29) ameliorates impaired myoblast differentiation induced by myostatin and GDF11, but not activin or TGF-β1. Moreover, intramuscular injection of p29 alleviated muscle atrophy and decreased the absolute force in caveolin 3-deficient limb-girdle muscular dystrophy 1C model mice. The injection suppressed activation of myostatin signaling and restored the decreased numbers of muscle precursor cells caused by caveolin 3 deficiency. Our findings indicate a novel concept for this newly identified inhibitory core of the prodomain of myostatin: that it not only suppresses the ligand, but also prevents two distinct membrane receptors from binding to the ligand. This study provides a strong rationale for the use of p29 in the amelioration of skeletal muscle atrophy in various clinical settings.