Steroid and thyroid hormone receptors are members of the superfamily of nuclear receptors (NR) that participate in developmental and homeostatic mechanisms by changes in the transcription of specific genes. These activities are governed by the receptors' cognate ligands and through interaction with the components of the transcriptional machinery. A number of coactivator molecules of the steroid receptor coactivator (SRC)/nuclear receptor coactivator (NCoA) family interact with activation functions within NRs through a conserved region containing helical domains of a core LXXLL sequence and, thereby, participate in transcriptional regulation. Using a mammalian-two-hybrid assay, we show that the thyroid hormone receptor beta (TRbeta) and estrogen receptor beta (ERbeta) have different LXXLL motif preferences for interactions with SRC-1. Using large random and focused (centered on the LXXLL motif) recombinant peptide diversity libraries, we have obtained novel peptide sequences that interact specifically with ERbeta or with TRbeta in a ligand-dependent manner. Random sequence libraries yielded LXXLL-containing peptides, and sequence analysis of selected clones revealed that the preferred residues within and around the LXXLL motif vary significantly between these two receptors. We compared the receptor binding of library-selected peptides to that of peptides derived from natural coactivators. The affinities of selected peptides for the ligand binding domains of ERbeta and TRbeta were similar to the best natural LXXLL motifs tested, but showed a higher degree of receptor selectivity. These selected peptides also display receptor-selective dominant inhibitory activities when introduced into mammalian cells. Finally, by directed mutations in specific residues, we were able to alter the receptor binding preference of these peptides.