Thyroid hormone receptors are ligand-inducible transcription factors that can potentially interact with thyroid hormone response elements as homodimers or heterodimers with the retinoid X receptor. It has generally been felt, however, that the heterodimer is responsible for induction of gene expression. We have demonstrated previously that the optimal thyroid hormone receptor binding sequence is not the consensus hexamer half-site AGGTCA but is an octamer, TAAGGTCA. Based upon these findings, we hypothesize that thyroid hormone response elements composed of optimal half-sites (TAAGGTCA) will bind thyroid hormone receptors readily and activate gene expression independently of the retinoid X receptor. In contrast, response elements composed of suboptimal half-sites (e.g. GCAGGTCA) will require the retinoid X receptor to facilitate thyroid hormone receptor-mediated gene expression. To test this hypothesis, we have reconstituted thyroid hormone receptor-mediated gene expression in yeast. Our studies confirm the hypothesis that the retinoid X receptor is required for gene expression from response elements composed of suboptimal half-sites, whereas thyroid hormone receptors are sufficient to activate gene expression maximally from response elements containing optimal half-sites. Furthermore, coexpression of steroid receptor coactivator-1 is required for ligand-dependent gene activation from single response elements. Surprisingly, however, coexpression of the retinoid X receptor decreases the steroid receptor coactivator-1-dependent thyroid hormone induction. Overall these data demonstrate that the architecture of the thyroid hormone response element dictates the nuclear receptor requirements for gene activation. The studies suggest that different coactivators may be required for gene activation depending upon the response element architecture and the nature of the bound thyroid hormone receptor complex (homo- versus heterodimer).