AbstractFollistatin-like 3 (FSTL3), a glycoprotein that inhibits transforming growth factor-β (TGFβ) ligands such as activin, is expressed highly in the placenta and other vascular tissues. In addition, FSTL3 is strongly induced in pre-eclamptic placenta. To test the hypothesis that FSTL3 function is required for capillary bed structure and function we studied the placenta in FSTL3 gene deleted mice (FSTL3 KO). We have previously shown that FSTL3 deletion produces striking defects in the placenta when compared to WT. Placental size increases significantly in comparison to WT, at 16.5 and 18.5 dpc, with concurrent reduction in placental efficiency at 18.5 dpc. Histological analyses reveal structural differences in placental junctional zones in FSTL3 KO placenta compared to WT. Morphometric analyses show that the labyrinth area compared to the placenta area is significantly reduced in FSTL3 KO mice. We also found that activin-responsive FSTL3-synexpression genes are upregulated in FSTL3 KO placenta. Of these, EPHB4 protein is induced in the placenta along with its ligand EphrinB2. Here we show that FSTL3 deletion leads to endothelial cell expansion but reduction in blood vessel density along with increased extracellular matrix deposition. Further investigation of the placental phenotype revealed differential expression patterns of desmin and cytokeratin protein, reduced von Willebrand factor (VWF) and increased CD31 and VEGFR2 labelling within FSTL3 KO mice placental labyrinths. To identify mechanisms that might lead to the altered placental development in FSTL3 KO mice qPCR analyses were performed. Our results identified differences in the expression of crucial transcripts, such as Cdh5, Pgf, Fra1and Cited1, that are associated with the regulation of vascular biology. Additionally, we find increased Histone3 and SMAD2 phosphorylation in FSTL3 KO placenta indicating increased proliferation and activin signalling, respectively. These findings suggest that the balance between cellular proliferation and differentiation might be altered in the absence of FSTL3. Thus, we conclude that FSTL3 function, at least partly through the inhibition of activin action, is necessary for normal placental circulation and development.