There are two COUP-TF genes, COUP-TFI and COUP-TFII (for a review, see reference 58), which share a high degree of homology in their DBDs and putative LBDs. In addition, COUP-TFI and COUP-TFII are highly conserved among different species, suggesting that they play important roles in development. Although the expression of COUP-TFI and COUP-TFII is highly overlapping in mice (24, 43), COUP-TFI is abundantly expressed in the central and peripheral nervous system, while COUP-TFII is highly expressed in the mesenchymal component of the developing organs (46). Based on this expression pattern, we have proposed that COUP-TFI is important for neural development and that COUP-TFII is important in organogenesis through the regulation of mesenchymal cell-epithelial cell interactions. Indeed, the targeted disruption of either of these two genes in mice results in a lethal phenotype. COUP-TFI-deficient mice show defects in the development of the central and peripheral nervous systems (47; unpublished observations), whereas mutation of the COUP-TFII gene results in defects in the heart and vasculature formation (unpublished observations).Vasculature and organ formation requires very tight communication between epithelial cell and mesenchymal cell populations (7). This communication is essential for the differentiation of these two cell types (14). Since COUP-TFII is highly expressed in the mesenchyme but is undetectable in the epithelium of most organs, it is likely that COUP-TFII plays an important role in mesenchymal cell-epithelial cell interactions during organogenesis. This process has been well studied for the prostate, where several growth factors and the extracellular matrix are involved in this communication between the mesenchyme and the epithelium (11,19).COUP-TFs are able to bind to a variety of dispositions of the basic AGGTCA motif, including those recognized by the receptors of retinoic acid (RAR), thyroid hormone, and vitamin D (13). This ability makes COUP-TFs capable of competing for the response elements of these receptors, thus acting as passive repressors of the transcriptional activation induced by them (12,13,56). Another mechanism of passive repression by COUP-TFs involves their ability to heterodimerize with the 9-cis retinoic acid receptor (RXR), reducing its availability for other nuclear receptors that use it as a partner. In addition, COUP-TFs contain an active repression domain within their putative LBDs (1,31). This repression domain is capable of interacting with corepressors such as SMRT and N-CoR (50), molecules that can recruit histone deacetylase activities to the DNA to suppress transcription (2,23,39).