Decorin, a small leucine-rich proteoglycan, plays an important role in the regulation of cell growth. Our recent study has shown that immobilized decorin in the collagen matrix sequesters myostatin into the extracellular matrix and prevents its inhibitory action to myoblast proliferation in vitro. However, it still remains unclear whether free decorin could affect the proliferation and differentiation of myogenic cells by regulating myostatin activity. In the present study, we generated stable clonal C2C12 myoblasts that were over-expressing decorin, and showed that decorin over-expressing cells had an increased rate of proliferation as compared to control cells. Decorin over-expressing cells formed multi-giant hypertrophic myotubes with an elongated morphology and larger size as compared to control cells, although the initiation of differentiation in decorin over-expressing cells was somewhat delayed as compared to control cells. Western blot analysis demonstrated that MyoD expression in decorin over-expressing cells was lower than that in control cells until 12 h after induction to differentiate. At 48-h differentiation, the expressions of MyoD, p21 and myogenin were dramatically increased in cells that over-expressed decorin. Furthermore, we revealed that over-expression of decorin suppressed the activity of myostatin endogenously synthesized in C2C12 myoblasts and attenuated the signaling of exogenous myostatin. Consistent with these results, knock-down of decorin impairs C2C12 myoblast growth by increasing the sensitivity to exogenous myostatin. These results clearly show that decorin enhances the proliferation and differentiation of C2C12 myoblasts through suppressing myostatin activity. J. Cell. Physiol. 215: 856–867, 2008. © 2007 Wiley-Liss, Inc.