We have characterized the newly developed thyroid hormone antagonist NH-3 in both cell culture and in vivo model systems. NH-3 binds Xenopus laevis thyroid hormone receptors directly in vitro and induces a conformation distinct from agonist-bound receptors. Transcriptional activation of a thyroid hormone response element-containing reporter gene is strongly inhibited by NH-3 in a dose-dependent manner. In addition, NH-3 prevents X. laevis thyroid hormone receptors from binding to the p160 family of co-activators GRIP-1 and SRC-1 in a two-hybrid assay. To assess the potency of the compound in vivo, we used induced and spontaneous X. laevis tadpole metamorphosis, a thyroid hormone-dependent developmental process. NH-3 inhibits thyroid hormone-induced morphological changes in a dose-dependent manner and inhibits the up-regulation of endogenous thyroid hormone-responsive genes. Spontaneous metamorphosis is efficiently and reversibly arrested by NH-3 with at least the same effectiveness as the thyroid hormone synthesis inhibitor methimazole. Therefore, NH-3 is the first thyroid hormone antagonist to demonstrate potent inhibition of thyroid hormone action in both cell culture- and whole animal-based assays.