Adult granulosa cell tumor (aGCT) is a rare type of ovarian cancer characterized by estrogen excess. Interestingly, only the single somatic mutation FOXL2C134W was found across virtually all aGCTs. We previously reported that FOXL2C134W stimulates CYP19 transcription synergistically with SMAD3, leading to elevated estradiol synthesis in a human granulosa cell line (HGrC1). This finding suggested a key role for FOXL2C134W in causing the typical estrogen overload in patients with aGCTs. We have now investigated the effect of FOXO1, a tumor suppressor, on CYP19 activation by FOXL2C134W in the presence of SMAD3. Intriguingly, FOXO1 antagonized the positive, synergistic effect of FOXL2C134W and SMAD3 on CYP19 transcription. Similar to FOXL2C134W, FOXO1 binds SMAD3 but not the proximal FOXL2C134W binding site (−199 bp) of the CYP19 promoter identified in our earlier studies. The results of a competitive binding assay suggested a possible underlying mechanism in which FOXO1 sequesters SMAD3 away from FOXL2C134W, thereby negating the cooperative action of FOXL2C134W and SMAD3 in inducing CYP19 expression. To our knowledge, this study is the first to demonstrate the ability of FOXO1 to restore an altered CYP19 expression by FOXL2C134W and SMAD3 and provides insight as to why FOXO1 deficiency promotes GCT development in mice.