In the presence of retinoic acid (RA), the retinoid receptors, retinoic acid receptor (RAR) and retinoid X receptor (RXR), are able to up-regulate transcription directly by binding to RA-responsive elements on the promoters of responsive genes. Liganded RARs and RXRs are also capable of down-regulating transcription, but, by contrast, this is an indirect effect, mediated by the interaction of these nuclear receptors not with DNA but the transcription factor activating protein-1 (AP-1). AP-1 is a dimeric complex of the protooncoproteins c-Jun and c-Fos and directly regulates transcription of genes important for cellular growth. Previous in vitro results have suggested that RARs can block AP-1 DNA binding. Using a mammalian two-hybrid system, we report here that human RARalpha (hRARalpha) can disrupt in a RA-dependent manner the homo- and heterodimerization properties of c-Jun and c-Fos. This inhibition of dimerization is cell specific, occurring only in those cells that exhibit RA-induced repression of AP-1 transcriptional activity. Furthermore, this mechanism appears to be specific for the RARs, since another potent inhibitor of AP-1 activity, the glucocorticoid receptor, does not affect AP-1 dimerization. Our data argue for a novel mechanism by which RARs can repress AP-1 DNA binding, in which liganded RARs are able to interfere with c-Jun/c-Jun homodimerization and c-Jun/c-Fos heterodimerization and, in this way, may prevent the formation of AP-1 complexes capable of DNA binding.