The thyroid hormones and retinoic acid are potent modulators of differentiation, development, and gene expression. The transcriptional activities of these ligands are mediated by closely related nuclear receptors which bind and activate identical hormone responsive DNA elements. We noticed that a region within the ligand binding or E domain is well conserved between receptors for these hormones. This region contains hydrophobic heptad repeats that are structurally similar to the leucine-zipper dimerization domain. To study the function of this conserved domain, we examined the transcriptional responses of thyroid hormone receptor/c-erbA deletion mutants which lacked the heptad repeats. We previously reported that the chick c-erbA-alpha possesses hormone-independent (constitutive) activity in cells which express endogenous rat thyroid hormone receptor. We now demonstrate that this activity is abolished upon deletion of the conserved heptad repeats. This suggests that the heptad repeats mediate in vivo interactions between chick c-erbA and rat thyroid hormone receptors. To further test this hypothesis deletion mutants of chick c-erbA were constructed which contained all eight heptad repeats but which lacked the zinc-finger DNA binding domain. Although these mutants are transcriptionally inactive, they act in a dominant-negative fashion to block trans-activation by both the chick c-erbA-alpha and the endogenous thyroid hormone and retinoic acid receptors. We suggest that the heptad repeats mediate the formation of inactive mutant/wild-type hetero-dimers. Dimer formation suggests a mechanism to account for the dominant-negative phenotypes displayed by nonhormone binding variants of c-erbA, the proto-oncoprotein v-erbA and patients with the generalized thyroid hormone resistance syndrome.