Nuclear receptors (NRs) are a large family of transcription factors. One hallmark of this family is the ligand-binding domain (LBD), for its primary sequence, structure, and regulatory function. To date, NRs have been found exclusively in animals and sponges, which has led to the generally accepted notion that they arose with them. We have overcome the limitations of primary sequence searches by combining sequence profile searches with structural predictions at a genomic scale, and have discovered that the heterodimeric transcription factors Oaf1͞Pip2 of the budding yeast Saccharomyces cerevisiae contain putative LBDs resembling those of animal NRs. Although the Oaf1͞Pip2 LBDs are embedded in an entirely different architecture, the regulation and function of these transcription factors are strikingly similar to those of the mammalian NR heterodimer peroxisome proliferator-activated receptor ␣͞ret-inoid X receptor (PPAR␣͞RXR). We demonstrate that the induction of Oaf1͞Pip2 activity by the fatty acid oleate depends on oleate's direct binding to the Oaf1 LBD. The alteration of two amino acids in the predicted ligand-binding pocket of Oaf1 abolishes both ligand binding and the transcriptional response. Hence, LBDs may have arisen as allosteric switches, for example, to respond to nutritional and metabolic ligands, before the animal and fungal lineages diverged.evolution ͉ fatty acids ͉ structure prediction ͉ yeast ͉ bioinformatics T he nuclear receptor (NR) superfamily is characterized by two unique domains. Almost all members contain a very highly conserved DNA-binding domain (DBD) consisting of two Cys 4 zinc fingers, as well as a somewhat less conserved ligand-binding domain (LBD) comprising Ϸ250 aa at the C terminus. These building blocks confer the potential to act as both an intracellular receptor and a ligand-regulated transcription factor. Although only a minority of NRs have known ligands, it appears that LBDs evolved as allosteric switches to control NR activities as transcription factors (1-3).Homologous sequences have been identified in a large number of species by performing searches with DBD and͞or LBD sequences (3, 4). Because only animals and sponges have recognizable NR sequences, it has been concluded that NRs evolved in a common animal or urmetazoan ancestor (5, 6). However, because these primary sequence searches were all based on one of the available BLAST algorithms (7,8), more distant homologs with poor primary sequence similarity could not have been identified. We have now combined such searches with structural predictions and have uncovered additional potential homologs in yeast. Our results challenge the assumption that NRs are an animal-specific family of transcription factors and argue that allosteric regulation by NR LBDs is more ancient than animals.