The activins (dimers of βA or βB subunits, encoded by the genes Inhba and Inhbb, respectively) are TGF-β superfamily members that have roles in reproduction and development 1, 2, 3. Whereas mice homozygous for the Inhba-null allele demonstrate disruption of whisker, palate and tooth development, leading to neonatal lethality 4, 5, homozygous Inhbb-null mice are viable, fertile and have eye defects 6, 7. To determine if these phenotypes were due to spatiotemporal expression differences of the ligands or disruption of specific ligand-receptor interactions, we replaced the region of Inhba encoding the mature protein with Inhbb, creating the allele Inhba tm2Zuk (hereafter designated Inhba BK). Although the craniofacial phenotypes of the Inhba-null mutation were rescued by the Inhba BK allele, somatic, testicular, genital and hair growth were grossly affected and influenced by the dosage and bioactivity of the allele. Thus, functional compensation within the TGF-β superfamily can occur if the replacement gene is expressed appropriately. The novel phenotypes in these mice further illustrate the usefulness of insertion strategies for defining protein function.