Recently, we have shown that receptors for vitamin D3 (VDR), thyroid hormone (TR), and retinoic acid (RAR) activate preferentially through direct repeats (DRs) spaced by 3, 4, and 5 nucleotides, respectively. In addition, the RAR can activate weakly through DRs spaced by 2 nucleotides. A common feature of RAR, TR, and VDR is their ability to heterodimerize with the retinoid X receptor (RXR) through their ligand-binding domains (LBDs) to form high-affinity DNA-binding complexes that are specific for appropriately spaced repeats. In this paper we demonstrate that selective binding of RAR-RXR and TR-RXR heterodimers to their cognate DRs is a consequence of a novel cooperative dimer interaction within the DNA-binding domains (DBDs). Accordingly, a region in the first zinc finger of the TR and RAR DBDs interacts with the second zinc finger in the RXR DBD to promote selective DNA-binding to DRs spaced by 4 and 5 nucleotides, respectively. The resulting polarity established by this interaction places RXR in the 5' position of the direct repeats. These data provide a mechanism for selective receptor recognition of a restricted set of target sequences in DR DNA and explains the structural basis for physiological specificity.