The thyroid hormone receptor (TR)-α is a nuclear receptor that mediates both transrepression and ligand-dependent transactivation. Here we show that TRα is posttranslationally modified by acetylation in response to its own ligand (T3). Acetylation increases binding to DNA. Using mutagenesis, we identified three conserved lysine residues in the carboxi-terminal extension (CTE) of the DNA binding domain that are targets of the cAMP-response element-binding protein acetyltransferase. Substitution of these lysines by arginines in TRα decreased ligand binding affinity and precluded ligand-dependent release of corepressors and recruitment of coactivators. The acetylation TRα mutant lost the ability to transactivate even at high T3 concentrations and acts as a dominant-negative inhibitor of wild-type TR activity. In addition, whereas native TRα interferes with AP-1 function, the mutant is unable to mediate transrepression. Finally, TRα suppresses NIH-3T3 fibroblast transformation by the Ras oncogene both in a ligand-dependent and -independent manner, but the CTE mutant is unable to mediate ligand-dependent repression of transformation. These results reveal a key role for the CTE region on acetylation, ligand affinity, transactivation, transrepression, and antitransforming properties of TRα.