Nuclear receptors for steroid hormones, thyroid hormone, retinoids, and vitamin D are thought to mediate their transcriptional effects in concert with coregulator proteins that modulate receptor interactions with components of the basal transcription complex. In an effort to identify potential coregulators, receptor fusions with glutathione-S-transferase were used to isolate proteins in nuclear extracts capable of binding nuclear hormone receptors. Glutathione-S-transferase fusions with mouse retinoid X receptor-alpha enabled the selective isolation of a 65-kDa protein (p65) from nuclear extracts of rat and human cells. Binding of p65 to mouse retinoid X receptor-alpha was centered around the DNA-binding domain. p65 also bound regions encompassing the DNA-binding domain in estrogen, thyroid hormone, and glucocorticoid receptors. p65 was identified as TLS (translocated-in-liposarcoma), a recently identified member of the RNP family of nuclear RNA-binding proteins whose members are thought to function in RNA processing. The N-terminal half of TLS bound to thyroid hormone receptor with high affinity while the receptor was bound to appropriate DNA target sites. Functional studies indicated that the N-terminal half of TLS can interact with thyroid hormone receptor in vivo. TLS was originally discovered as part of a fusion protein arising from a chromosomal translocation causing human myxoid liposarcomas. TLS contains a potent transactivation domain whose translocation-induced fusion with a DNA-binding protein (CHOP) yields a powerful transforming oncogene and transcription factor. The transactivation and RNA-binding properties of TLS and the nature of its interaction with nuclear receptors suggest a novel role in nuclear receptor function.