Expression of keratin proteins, markers of epidermal differentiation and pathology, is uniquely regulated by the nuclear receptors for retinoic acid (RAR) and thyroid hormone (T3R) and their ligands: it is constitutively activated by unliganded T3R, but it is suppressed by ligand-occupied T3R or RAR. This regulation was studied using gel mobility shift assays with purified receptors and transient transfection assays with vectors expressing various receptor mutants. Regulation of keratin gene expression by RAR and T3R occurs through direct binding of these receptors to receptor response elements of the keratin gene promoters. The DNA binding "C" domain of these receptors is essential for both ligand-dependent and -independent regulation. However, the NH2-terminal "A/B" domain of T3R is not required for either mode of regulation of keratin gene expression. Furthermore, v-ErbA, an oncogenic derivative of cT3R, also activates keratin gene expression. In contrast to the previously described mechanism of gene regulation by T3R, heterodimerization with the retinoid X receptor is not essential for activation of keratin gene expression by unliganded T3R. These findings indicate that the mechanism of regulation of keratin genes by RAR and T3R differs significantly from the mechanisms described for other genes modulated by these receptors.