Activin, a member of the TGFbeta superfamily, is a negative regulator of cell growth and prolactin (PRL) production in pituitary lactotrope cells. However, the mechanisms by which this growth factor exerts its growth-inhibitory and -repressive effect on PRL remain unclear. In this study, we show that activin negatively regulates PRL expression at the transcriptional level through the Smad pathway and the multiple endocrine neoplasia type 1 gene product, menin. Our results also demonstrate that the tumor suppressor menin is required for activin-induced growth arrest of somatolactotrope cells. Moreover, we show that activin represses transcription and expression of Pit-1, a pituitary transcription factor that is essential for maintenance and development of lactotrope cells. We defined two Pit-1 DNA-binding sites in the proximal region of the PRL promoter as critical for the activin-mediated inhibition. Together, our results highlight the Smad pathway and the tumor suppressor menin as key regulators of activin effects on PRL and Pit-1 expression, as well as on cell growth inhibition, and emphasize the critical role of activin in the regulation of pituitary function.