Unlike the steroid hormone receptors that bind their response elements as homodimers, thyroid hormone receptor (TRs) as well as retinoic acid receptors and several other receptors have been shown to require heterodimerization with retinoid X receptors (RXR) for efficient binding to most response elements. In this article we have compared in detail TR DNA binding and its gene-regulatory characteristics in the presence and absence of RXR. We observe that in the absence of RXR, TRs are able to bind with high affinity as homodimers to a subset of thyroid hormone response elements consisting of two AGGTCA motifs arranged as inverted palindromes. This binding is inhibited by T3, which prevents TR homodimers from functioning as ligand-dependent transcriptional activators. We demonstrate that TR homodimers can act as potent ligand-responsive repressors, in particular when binding to sites 3' of the TATA box. Thus, TRs appear to have important regulatory functions in the absence of RXRs. This is strongly supported by our observations that some naturally occurring TR beta mutants that have been associated with generalized thyroid hormone resistance as well as the v-erbA oncogene are defective in this activity. Thus ligand-sensitive repression by TRs is an important regulatory mechanism.