Tissue culture transfection and in vitro biochemical studies have suggested that heterodimers of thyroid hormone receptors (TRs) and 9-cis retinoic acid receptors (RXRs) are the likely in vivo complexes that mediate the biological effects of thyroid hormone, 3,5,3'-triiodothyronine (T3). However, direct in vivo evidence for such a hypothesis has been lacking. We have previously reported a close correlation between the coordinated expression of TR and RXR genes and tissue-dependent temporal regulation of organ transformations during Xenopus laevis metamorphosis. By introducing TRs and RXRs either individually or together into developing Xenopus embryos, we demonstrate here that RXRs are critical for the developmental function of TRs. Precocious expression of TRs and RXRs together but not individually leads to drastic, distinct embryonic abnormalities, depending upon the presence or absence of T3, and these developmental effects require the same receptor domains as those required for transcriptional regulation by TR-RXR heterodimers. More importantly, the overexpressed TR-RXR heterodimers faithfully regulate endogenous T3 response genes that are normally regulated by T3 only during metamorphosis. That is, they repress the genes in the absence of T3 and activate them in the presence of the hormone. On the other hand, the receptors have no effect on a retinoic acid (RA) response gene. Thus, RA- and T3 receptor-mediated teratogenic effects in Xenopus embryos occur through distinct molecular pathways, even though the resulting phenotypes have similarities.