A soluble, recombinant fusion protein composed of a modified form of the extracellular domain of human activin receptor type IIb (ActRIIb) and linked to the human IgG1 Fc domain, with red blood cell stimulating activity. Upon subcutaneous administration, ACE-536 inhibits several ligands in the transforming growth factor (TGF)-beta superfamily. This prevents activation of a variety of TGF-beta superfamily members involved in late stage erythropoiesis and results in an increased differentiation and proliferation of erythroid progenitors. ACE-536 acts at a different, later stage than erythropoietin. This agent ultimately enhances red blood cell production and prevents anemia.