Regulation of gene expression by the thyroid hormones is thought to be mediated by a nuclear-associated receptor found in a wide variety of cells and tissues. Cellular homologues of the avian erythroblastosis virus oncogene, v-erbA, encode proteins which bind thyroid hormone with similar affinities as thyroid hormone receptors. However, it has not been shown that any of the c-erbA proteins can function as receptor and modulate thyroid hormone responsive genes. In this study, using transient expression of chimeric reporter constructs, we document that the chick fibroblast c-erbA-alpha and the human placental c-erbA-beta modulate cis-acting regulatory sequences of two thyroid hormone responsive genes; rat GH and PRL. From these results we conclude: 1) in a receptor deficient cell line (235-1) both c-erbA subtypes act as hormone-dependent modulators of PRL gene expression and hence function as thyroid hormone receptors, 2) in two different receptor containing cell lines (GH4C1 and GH1), both c-erbA proteins act in a hormone-independent fashion to regulate PRL and GH expression. This suggests that events other than ligand binding can result in formation of a c-erbA protein that modulates transcription of thyroid hormone responsive genes, 3) no qualitative functional differences were detected between alpha- and beta-c-erbA subtypes, and 4) depending on the cell-type, L-T3 acts through its endogenous receptor to stimulate (GH4C1) or suppress (GH1) expression of a chimeric PRL construct. In these cells, c-erbA expression results in the same positive or negative response as the endogenous receptor except that the response occurs in the absence of hormone. These results suggest that the endogenous receptor and the c-erbAs act by augmenting the effect of transcription factors which can positively or negatively control gene expression.