Recent studies have highlighted the importance of a novel oocyte-derived growth factor, bone morphogenetic protein-15 (BMP-15) in the regulation of proliferation and differentiation of granulosa cells in the ovary. Namely, BMP-15 stimulates granulosa cell mitosis and inhibits follicle-stimulating hormone (FSH) receptor mRNA expression in granulosa cell, thereby playing a critical role in the elaborate mechanism controlling ovarian folliculogenesis. At present, however, nothing is known about molecules which may regulate the biological activity of BMP-15. Here we demonstrate evidence that follistatin can form an inactive complex with BMP-15, through which follistatin inhibits BMP-15 bioactivities. The binding of follistatin to BMP-15 was directly demonstrated by a surface plasmon resonance biosensor, and the ability of follistatin to inhibit BMP-15 functions was determined by established BMP-15 bioassays using primary rat granulosa cells. Specifically, follistatin attenuated BMP-15 stimulation of granulosa cell proliferation and reversed BMP-15 inhibition of FSH receptor mRNA expression leading to the suppression of FSH-induced progesterone synthesis. This is the first demonstration of the biochemical interaction and biological antagonism of follistatin and BMP-15, which may be involved in the complex yet well-controlled mechanism of the regulation of follicle growth and development.