Variation in cell morphology and function is caused by differentiation. In myeloid differentiation, retinoid signaling, acting through heterodimers consisting of retinoic acid receptor and retinoid X receptor (RAR/RXR) plays a crucial part. The RAR/RXR heterodimers bind to naturally occurring response elements in the promoter regions of target genes, deciding whether the gene is to be transcribed or not. In the absence of the RAR-specific ligand all trans retinoic acid, RAR/RXR heterodimers are associated with the nuclear receptor corepressor N-CoR or the related SMRT. Here we show, using Western, far-Western and Northern blot techniques, that when the human monocytic cell line THP-1 is allowed to differentiate into macrophage-like cells the expression of N-CoR is down-regulated both at the protein and at the mRNA level. To investigate how this affects the transcriptional activity of retinoic acid response element (RARE)-controlled genes, we performed transient transfection experiments in THP-1 and CV-1 cells. The results indicate that N-CoR functions not merely as a repressor of basal transcription, but rather as a modulator of both basal and ligand-activated transcription of genes controlled by RAR/RXR heterodimers in a dose-dependent manner.