Myostatin (GDF-8) is a negative regulator of skeletal muscle growth and mice lacking myostatin show increased muscle mass. We have previously shown that myostatin deficiency increases bone strength and biomineralization throughout the skeleton, and others have demonstrated that myostatin is expressed during the earliest phase of fracture repair. In order to determine the role of myostatin in fracture callus morphogenesis, we studied fracture healing in mice lacking myostatin. Adult wild-type mice (+/+), mice heterozygous for the myostatin mutation (+/-), and mice homozygous for the disrupted myostatin sequence (-/-) were included for study at two and four weeks following osteotomy of the fibula. Expression of Sox-5 and BMP-2 were significantly upregulated in the fracture callus of myostatin-deficient (-/-) mice compared to wild-type (+/+) mice at two weeks following osteotomy. Fracture callus size was significantly increased in mice lacking myostatin at both two and four weeks following osteotomy, and total osseous tissue area and callus strength in three-point bending were significantly greater in myostatin -/- mice compared to myostatin +/+ mice at four weeks post-osteotomy. Our data suggest that myostatin functions to regulate fracture callus size by inhibiting the recruitment and proliferation of progenitor cells in the fracture blastema. Myostatin deficiency increases blastema size during the early inflammatory phase of fracture repair, ultimately producing an ossified callus having greater bone volume and greater callus strength. While myostatin is most well known for its effects on muscle development, it is also clear that myostatin plays a significant, direct role in bone formation and regeneration.