Activin exerts its effects by simultaneously binding to two types of p rotein serine/threonine kinase receptors, each type existing in various isoforms. Using the ActR-IB and ActR-IIB receptor isoforms, we have investigated the mechanism of activin receptor activation. ActR-IIB are phosphoproteins with demonstrable affinity for each other. However, activin addition strongly promotes an interaction between these two proteins. Activin binds directly to ActR-IIB, and this complex associates with ActR-IB, which does not bind ligand on its own. In the resulting complex, ActR-IB becomes hyperphosphorylated, and this requires the kinase activity of ActR-IIB. Mutation of conserved serines and threonines in the GS domain, a region just upstream of the kinase domain in ActR-IB, abrogates both phosphorylation and signal propagation, suggesting that this domain contains phosphorylation sites required for signalling. ActR-IB activation can be mimicked by mutation of Thr-206 to aspartic acid, which yields a construct, ActR-IB(T206D), that signals in the absence of ligand. Furthermore, the signalling activity of this mutant construct is undisturbed by overexpression of a dominant negative kinase-defective ActR-IIB construct, indicating that ActR-IB(T206D) can signal independently of ActR-IIB. The evidence suggests that ActR-IIB acts as a primary activin receptor and ActR-IB acts as a downstream transducer of activin signals.