Thyroid hormone is a critical mediator of central nervous system (CNS) development, acting through nuclear receptors to modulate the expression of specific genes. Transcription of the rat hairless (hr) gene is highly upregulated by thyroid hormone in the developing CNS; we show here that hr is directly induced by thyroid hormone. By identifying proteins that interact with the hr gene product (Hr), we find that Hr interacts directly and specifically with thyroid hormone receptor (TR)-the same protein that regulates its expression. Unlike previously described receptorinteracting factors, Hr associates with TR and not with retinoic acid receptors (RAR, RXR). Hr can act as a transcriptional repressor, suggesting that its interaction with TR is part of a novel autoregulatory mechanism.Many factors, both genetic and environmental, contribute to the formation and function of the mammalian central nervous system (CNS). An essential component of these processes is thyroid hormone (TH); if thyroid hormone levels are perturbed, abnormal development ensues, resulting in neurological deficits that include severe mental retardation (1-4). The effects of TH are mediated through the action of specific nuclear receptor proteins (5, 6). Thyroid hormone receptors (TR) act by binding to specific DNA sequences and subsequently activating or repressing the transcription of nearby genes in response to hormone binding (7,8). Several proteins that interact with TR and other nuclear hormone receptors, including both coactivators and corepressors, have been identified (9, 10).Although much is known about the mechanism of action of TR and other nuclear receptors, far less is known about the genes regulated by these receptors. We have shown that the rat hairless (hr) gene is highly up-regulated (Ͼ10-fold) by thyroid hormone in developing brain (11). The rapid induction (Ͻ4 hr) occurs even in the absence of protein synthesis, suggesting that hr is directly regulated by TR. Direct target genes are particularly important because such genes likely constitute the first step in the genetic program responsible for TH-mediated aspects of neural development. We show here that the upstream regulatory region of the hr gene includes a potent thyroid hormone response element (TRE), indicating that hr is indeed a direct target of TR.The murine hr locus was originally identified as a spontaneous mutation caused by an endogenous retrovirus (12). The hr gene is expressed predominantly in skin and brain; the mutant phenotype in skin is progressive hair loss and increased susceptibility to cancer, while the neurological phenotype has not yet been described (11, 13). The hr gene encodes a putative protein of approximately 127 kDa that lacks homology to known structural motifs other than a cluster of cysteine residues proposed to form a zinc finger (13). Toward defining the function of the hr gene product (Hr), we identified proteins that interact with Hr. Surprisingly, we found that Hr interacts with TR. Previously identified proteins that interact wit...