The pregnane X receptor (PXR; PXR.1) can be activated by structurally diverse lipophilic ligands. PXR.2, an alternatively spliced form of PXR, lacks 111 nucleotides encoding 37 amino acids in the ligand binding domain. PXR.2 bound a classic CYP3A4 PXR response element (PXRE) in electrophoretic mobility shift assays, but transfected PXR.2 failed to transactivate a CYP3A4-promoter-luciferase reporter plasmid in HepG2 cells treated with various PXR ligands. Cotransfection experiments showed that PXR.2 behaved as a dominant negative, interfering with PXR.1/rifampin activation of CYP3A4-PXRE-LUC. In HepG2 and LS180 cells stably transduced with PXR.1, PXR target genes (CYP3A4, MDR1, CYP2B6, and UGT1A1) were higher than mock-transduced cells in the absence of ligand and were further induced in the presence of rifampin. In contrast, PXR.2 stably introduced into the same host cells failed to induce target genes over levels in mock-transfected cells after drug treatment. Our homology modeling suggests that ligands bind PXR.1 more favorably, probably because of the presence of a key disordered loop region, which is missing in PXR.2. Yeast two-hybrid assays revealed that, even in the presence of ligand, the corepressors remain tightly bound to PXR.2, and coactivators are unable to bind at helix 12. In summary, PXR.2 can bind to PXREs but fails to transactivate target genes because ligands do not bind the ligand binding domain of PXR.2 productively, corepressors remain tightly bound, and coactivators are not recruited to PXR.2.