Retinoids regulate gene expression through the action of retinoic acid receptors (RARs) and retinoid-X receptors (RXRs), which both belong to the family of nuclear hormone receptors. Retinoids are of fundamental importance during development, but it has been difficult to assess the distribution of ligand-activated receptors in vivo. This is particularly the case for RXR, which is a critical unliganded auxiliary protein for several nuclear receptors, including RAR, but its ligand-activated role in vivo remains uncertain. Here we describe an assay in transgenic mice, based on the expression of an effector fusion protein linking the ligand-binding domain of either RXR or RAR to the yeast Gal4 DNA-binding domain, and the in situ detection of ligand-activated effector proteins by using an inducible transgenic lacZ reporter gene. We detect receptor activation in the spinal cord in a pattern that indicates that the receptor functions in the maturation of limb-innervating motor neurons. Our results reveal a specific activation pattern of Gal4-RXR which indicates that RXR is a critical bona fide receptor in the developing spinal cord.