Steroid receptor antagonists, such as the antiestrogen tamoxifen or the antiprogestin RU486, can have inappropriate agonist-like effects in tissues and tumors. To explain this paradox we postulated that coactivators are inadvertently brought to the promoters of DNA-bound, antagonist-occupied receptors. The human (h) progesterone receptor (PR) hinge-hormone binding domain (H-HBD) was used as bait in a two-hybrid screen of a HeLa cDNA library, in which the yeast cells were treated with RU486. We have isolated and characterized two interesting steroid receptor-interacting proteins that regulate transcription in opposite directions. The first is L7/SPA, a previously described 27-kDa protein containing a basic region leucine zipper domain, having no known nuclear function. When coexpressed with tamoxifen-occupied estrogen receptors (hER) or RU486-occupied hPR or glucocorticoid receptors (hGR), L7/SPA increases the partial agonist activity of the antagonists by 3- to 10-fold, but it has no effect on agonist-mediated transcription. The interaction of L7/SPA with hPR maps to the hinge region, and indeed, the hPR hinge region squelches L7/SPA-dependent induction of antagonist-mediated transcription. Interestingly, pure antagonists that lack partial agonist effects, such as the antiestrogen ICI164,384 or the antiprogestin ZK98299, cannot be up-regulated by L7/SPA. We also isolated, cloned, and sequenced the human homolog (hN-CoR) of the 270-kDa mouse (m) thyroid/retinoic acid receptor corepressor. Binding of hN-CoR maps to the hPR-HBD. mN-CoR, and a related human corepressor, SMRT, suppress RU486 or tamoxifen-mediated partial agonist activity by more than 90%. This suppression is completely squelched by overexpression of the hPR H-HBD. Additionally, both corepressors reverse the antagonist-dependent transcriptional up-regulation produced by L7/SPA. Our data suggest that the direction of transcription by antagonist-occupied steroid receptors can be controlled by the ratio of coactivators to corepressors recruited to the transcription complex by promoter-bound receptors. In normal tissues and in hormone-resistant breast cancers in which the agonist activity of mixed antagonists predominates, steroid receptors may be preferentially bound by coactivators. This suggests a strategy by which such partial agonist activity can be eliminated and by which candidate receptor ligands can be screened for this activity.