Embryo implantation remains a significant challenge for assisted reproductive technology, with implantation failure occurring in ∼50% of in vitro fertilization attempts. Understanding the molecular mechanisms underlying uterine receptivity will enable the development of new interventions and biomarkers. TGFβ family signaling in the uterus is critical for establishing and maintaining pregnancy. Follistatin (FST) regulates TGFβ family signaling by selectively binding TGFβ family ligands and sequestering them. In humans, FST is up-regulated in the decidua during early pregnancy, and women with recurrent miscarriage have lower endometrial expression of FST during the luteal phase. Because global knockout of Fst is perinatal lethal in mice, we generated a conditional knockout (cKO) of Fst in the uterus using progesterone receptor-cre to study the roles of uterine Fst during pregnancy. Uterine Fst-cKO mice demonstrate severe fertility defects and deliver only 2% of the number of pups delivered by control females. In Fst-cKO mice, the uterine luminal epithelium does not respond properly to estrogen and progesterone signals and remains unreceptive to embryo attachment by continuing to proliferate and failing to differentiate. The uterine stroma of Fst-cKO mice also responds poorly to artificial decidualization, with lower levels of proliferation and differentiation. In the absence of uterine FST, activin B expression and signaling are up-regulated, and bone morphogenetic protein (BMP) signals are impaired. Our findings support a model in which repression of activin signaling by FST enables uterine receptivity by preserving critical BMP signaling.