The cellular localization of the activin-binding protein, follistatin, in the rat testis has been a matter of some controversy with different investigators claiming that Sertoli cells, Leydig cells or germ cells are the primary cell types containing this protein. The localization of mRNA encoding follistatin was re-examined using reverse transcription-polymerase chain reaction (RT-PCR) and in situ hybridization as well as the distribution of follistatin by immunohistochemistry. The results demonstrate that mRNA encoding follistatin is located in many germ cells including type B spermatogonia, primary spermatocytes with the exception of the late leptotene and early zygotene stages, and spermatids at steps 1 to 11. It is also found in Sertoli cells and endothelial cells but not in Leydig cells. Immunohistochemistry, using two different antisera to follistatin, showed that this protein was localized to spermatogonia, primary spermatocytes at all stages except the zygotene stage, spermatids at all stages and to endothelial cells and Leydig cells in the intratubular regions. The failure to detect mRNA for follistatin in Leydig cells using RT-PCR and in situ hybridization suggests that the immunohistochemical localization in these cells reflects binding of follistatin produced elsewhere. The widespread localization of follistatin, taken together with its capacity to neutralize the actions of activin, may indicate that follistatin modulates a range of testicular actions of activin, many of which remain unknown.