Genetic studies have suggested that transcriptional regulation of specific target genes (by either induction or repression) is the molecular basis of glucocorticoid-mediated lymphocyte apoptosis. To examine the role of transcriptional regulation more directly, we developed a complementation assay utilizing stable transfection of wild-type (wt) and mutant (nti) glucocorticoid receptor (GR) cDNA constructs into a GR-deficient S49 murine cell line (7r). Our data confirm that the level of functional GR is rate limiting for S49 apoptosis and moreover that the GR amino terminus (N terminus), which as been deleted from the nti GR, is absolutely required for complementation in this system. Surprisingly, we found that at physiological levels of receptor, expression of the nti GR in cells containing wt GR results in enhanced dexamethasone sensitivity rather than a dominant negative phenotype. One interpretation of these data is that DNA binding by wt-nti heterodimers may be functionally similar to that of wt-wt homodimers, indicating that GRE occupancy by at least one transactivation domain may be sufficient to induce the hormonal response. To determine whether acidic activating sequences such as those localized to the GR N terminus are important in the induction of lymphocyte apoptosis, we tested the activity of a chimeric receptor in which we replaced the entire GR N terminus with sequences from the herpes simplex virus VP16 protein. Our results demonstrate that 7r cells expressing VP-GR fusions are indeed steroid sensitive, strongly supporting the idea that S49 apoptosis is dependent on transcriptional regulation of specific genes which respond to acidic activating domains, implying that induction, rather than repression, may be the critical initiating event.