The thyroid hormone (T3) receptor type alpha, the c-ErbA alpha proto-oncoprotein, stimulates transcription of T3-dependent promoters, interferes with AP-1 activity, and induces erythroid differentiation in a ligand-dependent manner. The v-ErbA oncoprotein does not bind hormone and has lost all of these activities. Using c-ErbA/v-ErbA chimeras, we found that a deletion of 9 amino acids, conserved among many members of the nuclear receptor superfamily, which are located at the extreme carboxy terminus of c-ErbA alpha is responsible for loss of both transactivation and transcriptional interference activities. Single, double, and triple amino acid substitutions within this region completely abolished T3-dependent transcriptional activation, interference with AP-1 activity, and decreased T3 binding by c-ErbA alpha. However, the lower T3 binding by these mutants does not fully account for the loss of transactivation and transcriptional interference, since a c-ErbA/v-ErbA chimera which was similarly reduced in T3 binding activity has retained both of these functions. Deletion of homologous residues in the retinoic acid receptor alpha (RAR alpha) resulted in a similar loss of transactivation and transcriptional interference activities. The ability of c-ErbA alpha to induce differentiation of transformed erythroblasts is also impaired by all of the mutations introduced into the conserved carboxy-terminal sequence. We conclude that this 9-amino-acid conserved region is essential for normal biological function of c-ErbA alpha and RAR alpha and possibly other T3 and RA receptors.