Keloid scars represent a pathological response to cutaneous injury, under the regulation of many growth factors. Activin-A, a dimeric protein and a member of the transforming growth factor- superfamily, has been shown to regulate various aspects of cell growth and differentiation in the repair of the skin mesenchyme and the epidermis. Thus, our aim was to study the role of activin and its antagonist, follistatin, in keloid pathogenesis. Increased mRNA expression for activin was observed in keloid scar tissue by performing RNase protection assay. Immunohistochemistry showed increased localization of both activin-A and follistatin in the basal layer of epidermis of keloid tissue compared with normal tissue. ELISA demonstrated a 29-fold increase in concentration of activin-A and approximately 5-fold increase in follistatin in conditioned media from keloid fibroblasts compared with normal fibroblasts. Although keloid keratinocytes produced 25% more follistatin than normal keratinocytes, the amounts of activin-A, in contrast, was about 77% lower. Proliferation of fibroblasts was stimulated when treated with exogenous activin-A (46% increase in keloids fibroblasts), or following co-culture with hAHaCaT cells (66% increase). Activin-A upregulated key extracellular matrix components namely collagen, fibronectin and -SMA, in normal and keloid fibroblasts. Co-treatment of follistatin with activin-A blocked the stimulatory effects of activin on extracellular matrix components. These findings emphasize the importance of the activin system in keloid biology and pathogenesis and suggest a possible therapeutic potential of follistatin in the prevention and treatment of keloids.