A number of nuclear receptors, including retinoic acid receptors (RARs), retinoid-X receptors (RXRs), hepatocyte nuclear factor 4 (HNF-4), chicken ovalbumin upstream promoter transcription factor I (COUP-TFI), apolipoprotein regulatory protein 1 (ARP-1) and peroxisome proliferator-activated receptor (PPAR), bind to response elements comprised of two core motifs, 5'-RG(G/T)TCA, or a closely related sequence separated by 1 nt (DR1 elements). The potential role of the precise sequence of the core motif as well as the spacer nucleotide in determining specificity and promiscuity of receptor-response element interactions was investigated. We show here that nucleotides at base positions 1, 2 and 4 of the core motif as well as the spacer nucleotide determine the binding preference of HNF-4 and ARP-1 homodimers and RAR:RXR and PPAR:RXR heterodimers. In transfection experiments transcriptional activation by HNF-4 and PPAR:RXR and repression by ARP-1 correlated with the relative in vitro binding affinity provided the element was located within the proper promoter context. Furthermore, promoter context also determined whether an element that binds to HNF-4 and PPAR:RXR with equal affinity functions as an HNF-4 response element or PPAR response element. Thus, apart from the element-specific differences in affinity for the receptors, additional promoter-specific transcription factors that interact with HNF-4 and PPAR:RXR determine the specificity of transcriptional response through DR1-type elements.