The nuclear hormone receptors regulate target gene expression in response to hormones of extracellular origin. The DNA binding specificity of these receptors therefore plays the critical role of defining the precise repertoire of target genes that respond to a given hormone. We report here an analysis of the DNA binding specificity of the thyroid hormone receptor (c-ErbA protein) and that of an oncogenic derivative, the v-ErbA protein. These otherwise closely similar proteins exhibit quite divergent DNA sequence specificities at multiple positions within the DNA binding site. The thyroid hormone receptor (c-ErbA protein exhibits a particularly broad DNA specificity, whereas the v-ErbA protein is comparatively quite specific. Intriguingly, these differences in DNA recognition largely map to an N-terminal receptor domain not traditionally implicated in DNA binding, and are further influenced by heterodimer formation with retinoid X receptors. We propose that the N terminus of nuclear hormone receptors plays an critical role in DNA recognition by altering the conformation of the receptor domains that make the actual base-specific contacts.