Thyroid hormone (TH) action is mediated by TH receptors (TRs), which are members of the nuclear hormone receptor superfamily. In vitro studies have demonstrated that TR activity is regulated by interactions with corepressor and coactivator proteins (CoRs and CoAs, respectively). TH stimulation is thought to involve dissociation of CoRs and recruitment of CoAs to the liganded TR. In contrast, negative regulation by TH is thought to occur via recruitment of CoRs to the liganded TR. The physiological role of CoAs bound to TRs, however, has yet to be defined. In this study, we used gene-targeting techniques to mutate the TR-beta locus within its activation function-2 (AF-2) domain (E457A). This mutation was chosen because it completely abolished CoA recruitment in vitro, while preserving normal triiodothyronine (T3) binding and CoR interactions. As expected, TH-stimulated gene expression was reduced in homozygous E457A mice. However, these animals also displayed abnormal regulation of the hypothalamic-pituitary-thyroid axis. Serum thyroxine, T3, and thyroid-stimulating hormone (TSH) levels and pituitary Tshb mRNA levels were inappropriately elevated compared with those of WT animals, and L-T3 treatment failed to suppress serum TSH and pituitary Tshb mRNA levels. Therefore, the AF-2 domain of TR-beta is required for positive and, paradoxically, for negative regulation by TH in vivo.