There is accumulating evidence to suggest that pituitary adenylate cyclase-activating polypeptide (PACAP) may be an important modulator ofgonadotrope function. One of the actions of PACAP identified previously is to decrease FSHbeta messenger RNA (mRNA) levels. In the present series of experiments we demonstrate that PACAP-induced suppression of FSHbeta mRNA correlates with a rise in follistatin mRNA levels in primary pituitary cell cultures. Transient transfection of gonadotrope-derived alphaT3-1 cells with a rat follistatin promoter-luciferase reporter plasmid reveals that PACAP stimulates follistatin gene transcription. PACAP stimulation of LUC activity was maximal at concentrations as low at 1 nM. Furthermore, in alphaT3-1 cells PACAP activation of the follistatin promoter appears to be via the cAMP-dependent protein kinase A pathway. Accordingly, we propose that PACAP stimulates follistatin transcription, which neutralizes activin activity and thereby reduces FSHbeta mRNA. Since PACAP and follistatin are colocalized in multiple tissues including the brain, adrenals, and gonads, our findings may reflect a broadly distributed autocrine/paracrine mechanism for modification of activin effects that is under PACAP control.