The matrix metalloproteinase (MMP) stromelysin-3 (ST3) (MMP11) was first isolated as a breast cancer-associated gene and is expressed in diverse human carcinomas and various developmental processes involving apoptosis. The Xenopus laevis ST3 is highly up-regulated by thyroid hormone (T3) during amphibian metamorphosis, and its expression is spatially and temporally correlated with apoptosis in different tissues. Furthermore, it has been shown in vivo and in organ cultures to play a critical role in regulating T3-induced epithelial cell death during intestinal metamorphosis. Earlier studies suggest that ST3 is a direct T3 response gene, although a thyroid hormone response element (TRE) was not found in the initial analysis of the ST3 promoter. Here, we have identified a strong TRE consisting of two nearly perfect direct repeats of the consensus nuclear hormone receptor binding element AGGTCA separated by 4 bp in the first intron of the Xenopus ST3 gene. We show that the heterodimers of T3 receptor (TR) and 9-cis-retinoic acid receptor bind to the TRE both in vitro and in vivo in the context of chromatin. Furthermore, T3 induces strong activation of the promoter through the intronic TRE. Interestingly, although the unliganded TR/9-cis-retinoic acid receptor was able to recruit corepressors to the promoter, it had little repressive effect on the promoter in vivo. These results suggest that the intronic TRE mediates the inductive effect of T3 and that promoter context plays an important role in gene repression by unliganded TR.