Resistance to thyroid hormone (RTH) is usually dominantly inherited and characterized by elevated thyroid hormone levels, impaired feedback inhibition of pituitary TSH production, and variable hormonal responsiveness in peripheral tissues. We have identified 20 different mutations in the thyroid hormone beta-receptor (TR beta) gene in RTH and assayed mutant receptor properties using the TSH alpha subunit gene promoter or promoters containing three different types of positive thyroid response element (TRE). Dominant negative inhibition of wild type TR beta action by mutant receptors was also tested. The mutant receptors exhibited differing transcriptional inhibitory properties and dominant negative potential with the TSH alpha promoter that correlated with their impaired hormone binding, whereas transactivation and dominant negative effects with promoters containing positive TREs varied depending on their configuration. Heterodimeric mutant receptor-retinoid X receptor (RXR) interactions, either in cultured cells or as TRE-bound complexes in gel retardation assays, were uniformly preserved, whereas homodimeric receptor interactions could not be detected in vivo, and in vitro homodimer formation on TREs was variably reduced or absent for some mutant proteins. We correlate these findings with the distribution of receptor mutations that cluster in two areas within the hormone binding domain outside putative dimerization regions and show that artificial mutations that impaired heterodimerization abrogated dominant negative activity. Therefore, we suggest that the dominant negative effect of mutant receptors in the pituitary-thyroid axis generates the characteristic biochemical abnormality of RTH and that variable resistance in other tissues may be due to response element-dependent differences in their dominant negative potential.