We and others have previously shown that a two-amino acid substitution in the base of the first zinc finger of the glucocorticoid receptor DNA binding domain (DBD) is sufficient to alter the receptor s target DNA from a glucocorticoid response element (GRE) to an estrogen response element (ERE). Activation of a thyroid hormone response element (TRE) has been shown to require an additional five-amino acid change in the second zinc finger of the thyroid hormone receptor (TR). Using closely related TRE and ERE sequences, we report that a receptor containing the TR DBD activates the ERE poorly, and receptors containing essential amino acids of the estrogen receptor (ER) DBD activate the TRE poorly. The ER DBD (expressed in Escherichia coli) selectively bound to a 32P-labeled ERE (32P-ERE) as a dimer and a 32P-TRE as a monomer, whereas the TR DBD bound 32P-TRE as a dimer and 32P-ERE as a monomer. When hybrid receptor DBDs were examined, we found that the five amino acids in the second zinc finger of the TR necessary for TRE activation were also essential for dimer formation on a TRE. Dimer formation of ER on an ERE was localized to the second half of the second zinc finger. These results suggest that the ability of ER and TR to functionally discriminate between an ERE and a TRE is a result of dimerization of their DBDs.