The transforming growth factor beta family member activin is an important regulator of development and tissue repair. It is strongly up-regulated after acute injury to the adult brain, and application of exogenous activin protects neurons in several lesion models. To explore the role of endogenous activin in the normal and acutely damaged brain, we generated transgenic mice expressing a dominant-negative activin receptor IB (dnActRIB) mutant in forebrain neurons. The functionality of the transgene was verified in vivo. Hippocampal neurons from dnActRIB mice were significantly more vulnerable to intracerebroventricular injection of the excitotoxin kainic acid than those from control littermates, indicating a crucial role of endogenous activin in the rescue of neurons from excitotoxic insult. Because dnActRIB is only expressed in neurons, but not in glial cells, activin affords protection at least in part through a direct action on endangered neurons. Unexpectedly, the transgenic mice also revealed a prominent novel role of activin in glutamatergic neurotransmission in the intact adult brain. Electrophysiologic examination of excitatory synapses onto CA1 pyramidal cells in hippocampal slices of dnActRIB mice showed a reduced NMDA current response, which was associated with impaired long term potentiation. This is the first demonstration that activin receptor signaling is essential to optimize the performance of neuronal circuits in the mature brain under physiological conditions.