Activin, a member of the transforming growth factor beta (TGFbeta) superfamily, regulates diverse processes, such as cellular growth and differentiation. There is increasing evidence that TGFbeta and its signaling effectors are key determinants of tumor cell behavior. Loss of sensitivity to TGFbeta-induced growth arrest is an important step toward malignancy. We previously characterized FLRG as an extracellular antagonist of activin. Here, we show that activin-induced growth inhibition is altered in FLRG-expressing breast cancer lines. Silencing FLRG induced growth inhibition, which is reversible upon addition of exogenous FLRG. We showed that FLRG silencing effects resulted from restoration of endogenous activin functions as shown by increased levels of phosphorylated smad2 and up-regulation of activin target gene transcripts. Furthermore, the growth inhibition induced by FLRG silencing was reversible by treatment with a soluble form of type II activin receptor. Finally, a strong expression of FLRG was observed in invasive breast carcinomas in contrast with the normal luminal epithelial cells in which FLRG was not detected. Our data provide strong evidence that endogenous FLRG contributes to tumor cell proliferation through antagonizing endogenous activin effects.