As the obligate member of most nuclear receptor heterodimers, retinoid X receptors (RXRs) can potentially perform two functions: cooperative binding to hormone response elements and coordinate regulation of target genes by RXR ligands. In this paper we describe allosteric interactions between RXR and two heterodimeric partners, retinoic acid receptors (RARs) and peroxisome proliferator-activated receptors (PPARs); RARs and PPARs prevent and permit activation by RXR-specific ligands, respectively. By competing for dimerization with RXR on response elements consisting of direct-repeat half-sites spaced by 1 bp (DR1 elements), the relative abundance of RAR and PPAR determines whether the RXR signaling pathway will be functional. In contrast to RAR, which prevents the binding of RXR ligands and recruits the nuclear receptor corepressor N-CoR, PPAR permits the binding of SRC-1 in response to both RXR and PPAR ligands. Overexpression of SRC-1 markedly potentiates ligand-dependent transcription by PPAR␥, suggesting that SRC-1 serves as a coactivator in vivo. Remarkably, the ability of RAR to both block the binding of ligands to RXR and interact with corepressors requires the CoR box, a structural motif residing in the N-terminal region of the RAR ligand binding domain. Mutations in the CoR box convert RAR from a nonpermissive to a permissive partner of RXR signaling on DR1 elements. We suggest that the differential recruitment of coactivators and corepressors by RAR-RXR and PPAR-RXR heterodimers provides the basis for a transcriptional switch that may be important in controlling complex programs of gene expression, such as adipocyte differentiation.Nuclear receptors are ligand-dependent transcription factors that regulate gene networks involved in controlling growth, morphogenesis, cellular differentiation, and homeostasis (reviewed in reference 40). Activation of transcription by nuclear receptor homodimers or heterodimers in response to ligands requires binding of the nuclear receptors to response elements in target genes that generally contain two core recognition sequences, or "half-sites," that are contacted by each of the DNA binding domains of the dimer (reviewed in reference 21). Response elements for heterodimeric nuclear receptors are typically arranged as direct repeats, with the nucleotide spacing between half-sites serving as an important determinant of the specificity of binding by different heterodimers (42, 54). Central to the function of heterodimeric nuclear receptors is the retinoid X receptor (RXR), which is the obligate member of the majority of heterodimers reported. Heterodimeric partners for RXR include retinoic acid receptors (RARs), thyroid hormone receptors (TRs), vitamin D receptors (VDRs) (6,31,41,60,62), and peroxisomal proliferator-activated receptors (PPARs) (2,19,28,32). In each case, RXR is required for high-affinity DNA binding, implying that one function of RXR is simply to serve as an auxiliary DNA binding factor.The identification of 9-cis retinoic acid (RA) as an activating ligand...