The diverse effects of retinoids on the development, growth, and homeostasis of vertebrate organisms are mediated in part by three distinct isoforms of retinoic acid receptors (RARs). These proteins, which are structurally and functionally closely related to thyroid hormone receptors and the oncogene product v-ErbA, regulate patterns of gene expression in target tissues. One approach to study the distinct effects of retinoic acid in cells is to subvert this activity of endogenous receptors by expression of dominant negative receptor derivatives. We demonstrate here that RARa, RARf8, and RARy can be converted into potent negative transcriptional regulators that block wild-type RAR function. Furthermore, these mutant RARs, but not the wild-type receptors, actively repress the basal transcription level of target promoters. When expressed in transgenic mice, the most potent of these inhibitory receptor mutants is apparently able to disturb developmental processes by inducing a cleft palate in transgenic offspring.Retinoids and, in particular, retinoic acid (RA) are a group of vitamin A-derived substances that exert striking effects on vertebrate development. RA can promote differentiation of a wide variety of cell types in vitro, while in vivo RA has been shown to provide positional information and to influence pattern formation (for review, see refs. 1 and 2). RA is also known to be teratogenic in mammals, causing a range of abnormalities in the face, cleft palate, and malformations of the central nervous system as well as the limbs (3, 4).The identification of three distinct isoforms of RA receptors (RARs; refs. 5-11) as members of the nuclear receptor superfamily provides a model for the molecular mechanism of action of RA. This family of receptors controls cell function by regulating gene expression in target tissues in a ligandinducible fashion. With the exception of the N and C termini, which are almost completely divergent (9), the three RARs are remarkably similar to one another and are structurally and functionally closely related to thyroid hormone receptors (12, 13). Recently, a second RA response pathway has been identified and shown to be mediated by a family of retinoid X receptors (RXRs; refs. 14-17). RXRs differ from RARs in primary sequence and in their response to retinoids (18, 19). They have also been shown to function as coregulators of RARs, thyroid hormone receptors (TRs), and vitamin D3 receptors (VDRs) (16,17,20).We have previously described that the viral homologue of the TR, the v-erbA oncogene product, can function as a potent TR antagonist (21). The constitutive negative phenotype of v-ErbA is due to mutations in the C terminus of the TR (21-23), a region where v-ErbA, the TR, and RARs exhibit 53% amino acid similarity. In the present study, a further characterization of the structure/function relationship of these receptors has allowed us to convert RARa, RAR,3, and RARy into potent negative transcriptional regulators that no longer respond to RA. Furthermore, these mutant RARs ...