The transcription factor FAST-1 has recently been shown to play a key role in the specification of mesoderm by TGF beta superfamily signals in the early Xenopus embryo. We have cloned Fast1, a mouse homologue of Xenopus FAST-1, and characterized its expression during embryogenesis and function in activin/TGF beta signal transduction. In vitro, Fast1 associates with Smads in response to an activin/TGF beta signal to form a complex that recognizes the Xenopus activin responsive element (ARE) targeted by Xenopus FAST-1. In intact cells, introduction of Fast1 confers activin/TGF beta regulation of an ARE-luciferase reporter. In embryos, Fast1 is expressed predominantly throughout the epiblast before gastrulation and declines as development progresses. We propose that mouse Fast1, like Xenopus FAST-1, mediates TGF beta superfamily signals specifying developmental fate during early embryogenesis.