TRs are transcription factors that regulate cell proliferation, differentiation, and apoptosis. They are cellular homologs of the transcriptionally inactive viral oncogene v-erbA. We tested the hypothesis that the functions of TRs could be impaired in cancer tissues as a result of aberrant expression and/or somatic mutations. As a model system, we selected human thyroid papillary cancer, in which the most common abnormalities, RET/papillary thyroid cancer rearrangements (fusion of RET kinase domain to the activating domains of other genes), were found in 40--45% of cases. We found that the mean expression levels of TR beta mRNA and TR alpha mRNA were significantly lower, whereas the protein levels of TR beta 1 and TR alpha 1 were higher in cancer tissues than in healthy thyroid. Sequencing of TR beta 1 and TR alpha 1 cDNAs, cloned from 16 papillary cancers, revealed that mutations affected receptor amino acid sequences in 93.75% and 62.5% of cases, respectively. In contrast, no mutations were found in healthy thyroid controls, and only 11.11% and 22.22% of thyroid adenomas had such TR beta 1 or TR alpha 1 mutations, respectively. The majority of the mutated TRs lost their trans-activation function and exhibited dominant negative activity. These findings suggest a possible role for mutated thyroid hormone receptors in the tumorigenesis of human papillary thyroid carcinoma.