Wnt4^‐/‐ XX gonads display features normally associated with testis differentiation, suggesting that WNT4 actively represses elements of the male pathway during ovarian development. Here, we show that follistatin (Fst), which encodes a TGFβ superfamily binding protein, is a downstream component of Wnt4 signaling. Fst inhibits formation of the XY‐specific coelomic vessel in XX gonads. In addition, germ cells in the ovarian cortex are almost completely lost in both Wnt4 and Fst null gonads before birth. Thus, we propose that WNT4 acts through FST to regulate vascular boundaries and maintain germ cell survival in the ovary. Developmental Dynamics 230:210–215, 2004. © 2004 Wiley‐Liss, Inc.