We propose that hormone receptors are encoded by specially organized genetic elements that have the capacity to manipulate their own structure with enzymes in controlled ways. An automodulating element codes for a cell surface receptor protein. When this detector molecule is stimulated by its ligand (either by a natural hormone or a drug analog), a signal is transmitted back to the nucleus to activate an enzyme pathway which alters the structure of the genetic element. In particular, the DNA alteration changes the expression of the receptor on the cell, either qualitatively or quantitatively, and hence the sensitivity of the cell to future hormone stimulation. Thus, drugs can permanently change cell phenotype. It is suggested further that automodulation also occurs in germ-line cells allowing effects of a drug or hormone exposure to carry over to following generations as a genetic trait.