The receptor for 9-cis-retinoic acid, retinoid X receptor (RXR), forms heterodimers with several nuclear receptors, including the receptor for all-trans-retinoic acid, RAR. Previous studies have shown that retinoic acid receptor can be activated in RAR/RXR heterodimers, whereas RXR is believed to be a silent co-factor. In this report we show that efficient growth arrest and differentiation of the human monocytic cell line U-937 require activation of both RAR and RXR. Also, we demonstrate that the allosteric inhibition of RXR is not obligatory and that RXR can be activated in the RAR/RXR heterodimer in the presence of RAR ligands. Remarkably, RXR inhibition by RAR can also be relieved by an RAR antagonist. Moreover, the dose response of RXR agonists differ between RXR homodimers and RAR/RXR heterodimers, indicating that these complexes are pharmacologically distinct. Finally, the AF2 activation domain of both subunits contribute to activation even if only one of the receptors is associated with ligand. Our data emphasize the importance of signaling through both subunits of a heterodimer in the physiological response to retinoids and show that the activity of RXR is dependent on both the identity and the ligand binding state of its partner.