Activin affects many aspects of cellular development, including those essential for reproductive fitness. This study examined the contribution of activin A to murine fetal testicular development, revealing contrasting outcomes of activin actions on Sertoli cells and gonocytes. Shortly after sex determination, from Embryonic Day 12.5 (E12.5) through to birth (0 dpp), the activin A subunit transcript (Inhba) level rises in testis but not ovary, followed closely by the Inha transcript (encoding the inhibitory inhibin alpha subunit). Activin receptor transcript levels also change, with Acvr1 (encoding ALK2) and Acvr2b (ActRIIB) significantly higher and lower, respectively, at 0 dpp compared with E13.5 and E15.5. Transcripts encoding the signaling mediators Smad1, Smad3, and Smad4 were higher at 0 dpp compared with E13.5 and E15.5, whereas Smad2, Smad5, and Smad7 were lower. Detection of phosphorylated (P-)SMAD2/3 in nearly all testis cell nuclei indicated widespread transforming growth factor beta (TGFB) and/or activin ligand signaling activity. In contrast to wild-type littermates, activin betaA subunit knockout (Inhba(-/-)) mice have significantly smaller testes at birth, attributable to a 50 lower Sertoli cell number and decreased Sertoli cell proliferation from E13.5. Inhba(-/-) testes contained twice the normal gonocyte number at birth, with some appearing to bypass quiescence. Persistence of widespread P-SMAD2/3 in Inhba(-/-) cells indicates other TGFB superfamily ligands are active in fetal testes. Significant differences in Smad and cell cycle regulator transcript levels correlating to Inhba gene dosage correspond to differences in Sertoli and germ cell numbers. In Inhba(-/-) testes, Cdkn1a (encoding p21(cip1)), identified previously in fetal gonocytes, was lower at E13.5, whereas Cdkn1b (encoding p(27kip1) in somatic cells) was lower at birth, and cyclin D2 mRNA and protein were lower at E15.5 and 0 dpp. Thus, activin A dosage contributes to establishing the balance between Sertoli and germ cell number that is ultimately required for adult male fertility.