Studies of steroid receptors have led to the identification of a superfamily of ligand-inducible regulatory proteins that includes receptors for thyroid hormones and retinoic acid. This family of receptors regulates gene expression through binding to short cis-acting sequences referred to as hormone-response elements. Identification of a functional retinoic acid responsive element is crucial to our understanding of the mechanisms by which retinoic acid receptors activate gene expression and regulate cell differentiation. One impediment to such a study is the absence of any identified gene whose transcription is directly dependent on the receptor-hormone complex. Because the DNA-binding domains of the retinoic acid and thyroid hormone receptors are highly related (62% identical in their amino acid sequences), we have investigated the possibility that the retinoic acid receptor could activate gene expression through a thyroid hormone response element. We now report that a human retinoic acid receptor expressed from cloned complementary DNA or the endogenous retinoic acid receptor present in F9 teratocarcinoma cells can activate gene expression from promoters fused to a natural or synthetic thyroid hormone response element. The product translated in vitro from the human retinoic acid receptor cDNA can bind to a thyroid hormone response element with high affinity. The unexpected implication of these findings is that retinoic acid and thyroid hormones, acting through their respective receptors, could control overlapping gene networks involved in the regulation of vertebrate morphogenesis and homeostasis.