Liver X receptors (LXRs) are nuclear receptors that regulate the metabolism of cholesterol and bile acids. Despite information on the specificity of their natural ligands, oxysterols, relatively little is known about the ligand binding site in LXRs. The helix 3 region in the ligand binding domain (LBD) of peroxisome proliferator-activated receptors (PPARs) has been implicated in ligand entry. Sequence alignment of LXRs, farnesoid X receptor (FXR), and PPARs identified the corresponding helix 3 region in the LXRbeta LBD. Residues F268 and T272, which are conserved in all the aligned sequences and only in LXRs and FXR, respectively, were replaced with alanine. The effects of these mutations on ligand binding and receptor activation were examined using an in vitro ligand binding assay and a cell based reporter assay, respectively. The LXRbeta mutant F268A did not bind ligand. In contrast, conversion of T272 to alanine has no effect on ligand binding. By transiently expressing a chimeric receptor containing Escherichia coli tetracycline repressor (TetR) and LXRbeta LBD and a reporter with a TetR binding site, we show that mutant F268A lost the ability to activate transcription of the reporter, whereas mutant T272A still has an activity similar to that of the wild-type LXRbeta. These data, consistent with the findings in the in vitro ligand binding assay and our 3D modeling, are the first study that identifies a residue critical for ligand binding in LXRbeta.