Teeth form as ectodermal appendages, and their morphogenesis is regulated by conserved signaling pathways. The shape of the tooth crown results from growth and folding of inner dental epithelium, and the cusp patterning is regulated by transient signaling centers, the enamel knots. Several signal proteins in the transforming growth factor-beta (TGF beta) superfamily are required for tooth development. Follistatin is an extracellular inhibitor of TGF beta signaling. To investigate the roles of follistatin during tooth development, we analyzed in detail the expression patterns of follistatin, activin beta A, as well as Bmp2, Bmp4, and Bmp7 during tooth morphogenesis. We also examined the tooth phenotypes of follistatin knockout mice and of transgenic mice overexpressing follistatin in the epithelium under the keratin 14 (K14) promoter. The folding of the dental epithelium was aberrant in the molars of follistatin knockout mice, and the cusps were shallow with reduced cell proliferation and lack of anteroposterior polarization. The functions of both primary and secondary enamel knots were apparently disturbed. In K14-follistatin transgenic mice, the molar cusp pattern was also seriously affected (although different from the follistatin knockouts) and the occlusal surfaces of the molars were whorled. Their enamel was prematurely worn. In addition, all of the third molars were missing. Our results indicate that follistatin regulates morphogenesis and shaping of the tooth crown. We propose that finely tuned antagonistic effects between follistatin and TGF beta superfamily signals are critical for enamel knot formation and function, as well as for patterning of tooth cusps.