Transcriptional regulation by thyroid hormone is mediated through its nuclear receptors (TRs), which bind to target responsive elements as homodimers or as heterodimers with 9-cis retinoic acid receptors (RXRs). We examined the dimerization and functional properties of TRs containing mutations in the first and second zinc finger regions of the DNA binding domain. Interestingly, a mutation (R158G) in the loop of second zinc finger, or a chimeric mutant in which the second zinc finger of the glucocorticoid receptor (GR) was substituted for that of the TR, did not form homodimer, but still bound as a heterodimer with RXR alpha. Despite the presence of heterodimer formation, these mutants were functionally inactive in transfection assays. We conclude that sequences within the loop of the second zinc finger may play an important role in stability in vivo or transcriptional activation of the TR.