Anemia is very common in patients suffering from infections or chronic inflammation and can add substantially to the morbidity of the underlying disease. It is mediated by excessive production of the iron-regulatory peptide hepcidin, but the signaling pathway responsible for hepcidin up-regulation in the inflammatory context is still not understood completely. In the present study, we show that activin B has an unexpected but crucial role in the induction of hepcidin by inflammation. There is a dramatic induction of Inhbb mRNA, encoding the activin β(B)-subunit, in the livers of mice challenged with lipopolysaccharide, slightly preceding an increase in Smad1/5/8 phosphorylation and Hamp mRNA. Activin B also induces Smad1/5/8 phosphorylation in human hepatoma-derived cells and, synergistically with IL-6 and STAT-3 signaling, up-regulates hepcidin expression markedly, an observation confirmed in mouse primary hepatocytes. Pretreatment with a bone morphogenic protein type I receptor inhibitor showed that the effect of activin B on hepcidin expression is entirely attributable to its effect on bone morphogenetic protein signaling, most likely via activin receptor-like kinase 3. Activin B is therefore a novel and specific target for the treatment of anemia of inflammation.