Steroid and thyroid hormone receptors exhibit striking structural and functional similarity, suggesting that these nuclear receptors may enhance transcription of target genes by similar mechanisms. To address this issue, we studied transcriptional interference between progesterone and thyroid hormone receptors in vivo and in vitro. We observed that transcriptional interference occurred in a ligand-dependent manner between progesterone receptor-B (PR-B) and thyroid hormone receptor (TR) alpha or beta in transient transfection experiments. Ligand-occupied TRalpha or TRbeta, but not the unliganded receptor, strongly suppressed transactivation of a progesterone-responsive reporter gene by endogenous PRs in human breast carcinoma T47D cells. Ligand-dependent inhibitory cross-talk also occurred between transfected PR-B and TRalpha or TRbeta and vice versa in CV1 cells. This phenomenon did not require DNA binding by the "interfering" receptor but required it to be hormone-bound, indicating that a transcriptionally active form of the interfering receptor is essential for the interfering effect. To analyze further the mechanism of the ligand-dependent cross-talk, we reproduced transcriptional interference between PR and TR in a cell-free transcription system. We observed that the addition of triiodothyronine-bound recombinant TRbeta or a ligand binding domain (LBD) peptide(145-456) inhibited specifically transcriptional activation of a progesterone-responsive gene by endogenous PRs in nuclear extracts of T47D cells, while the basal level of transcription from a minimal TATA-promoter or transcription from an adenovirus major-late promoter remained unaffected. These results indicated that a transactivation function within the LBD of the interfering receptor TRbeta was likely to interact with a mediator protein(s), termed coactivator, that is distinct from basal transcription factors and is critical for efficient PR-induced transactivation. This concept was reinforced by biochemical evidence that treatment of T47D extracts with immobilized TRbeta LBD depleted the extract of the coactivator function in a triiodothyronine-dependent manner and markedly impaired progesterone-induced transactivation of progesterone response element-linked genes. Deletion of six amino acids(451-456) in the extreme COOH terminus of TRbeta resulted in a receptor that retained the ability to bind thyroid hormone but failed to inhibit progesterone-dependent transcription. Interestingly, these six amino acids are present in a region that is highly conserved among various nuclear hormone receptors and contains a ligand-dependent transactivation function, AF-2. Based on these results, we propose that a limiting coactivator protein(s) interacts with the AF-2 of PR or TR and mediates transactivation by the ligand-bound receptor. This regulatory molecule(s) may therefore serve as a common functional link between the pathways of hormone-inducible gene activation by various members of the nuclear receptor superfamily.