Recently, we reported the cloning and characterization of the novel orphan receptor TAK1. In this study, we analyze the interaction of TAK1 with a variety of response elements (RE's) and demonstrate that TAK1 binds effectively to RE's composed of the core motif PuGGTCA configured in direct repeats spaced by one or more nucleotides. TAK1 bound poorly to palindromic or inverted palindromic motifs and was unable to bind to a single core motif, suggesting that a dimeric site is required for binding. Transfection experiments with CV-1 cells revealed that TAK1 is able to repress retinoid- and thyroid-hormone-induced transactivation through a subset of retinoid and thyroid hormone RE's. Our studies indicate that the antagonism of RAR-mediated transactivation does not involve the formation of heterodimers between TAK1 and RAR or RXR but is due to the competition of TAK1 homodimers with RAR-RXR heterodimers and RXR homodimers for binding to RARE and RXRE, respectively. Our results suggest that the orphan receptor TAK1 can be a negative modulator of the regulation of gene expression mediated by retinoid and thyroid hormone signaling pathways.