Thyroid hormone (T3) and retinoic acid (RA) are essential for normal vertebrate 
development and are known to coregulate several genes. Early development is 
predominantly retinoic acid sensitive, yet thyroid hormone receptor-alpha (T3R 
alpha) is expressed along with retinoic acid receptors (RAR)-alpha, -beta, and 
-gamma. To determine the role of unliganded T3R alpha in early development and 
on RA-stimulated neural development, we used homologous recombination techniques 
to inactivate both T3R alpha gene alleles in mouse embryonic stem (ES) cells. 
Loss of both T3R alpha alleles resulted in an increase in basal and RA-induced 
expression of the endogenous RA-responsive genes, RAR beta and alkaline 
phosphatase, which demonstrates that T3R alpha has an inhibitory effect on the 
RA response. A similar magnitude of T3R inhibition of the RA response was seen 
in transient transfection assays of RA response elements in both ES and assays 
of RA response elements in both ES and JEG cells. Cotransfection experiments 
were used to demonstrate that inhibition of the RA response could be mediated by 
T3R alpha 1. The addition of T3R alpha 1, but not the T3R alpha variant c-erbA 
alpha 2, to T3R alpha-null ES cells restored the inhibitory effect on RA-induced 
gene expression. RA-stimulated neural differentiation was seen in the wild-type, 
but not in T3R alpha-null ES, cells, consistent with reports of abnormal neural 
development as a consequence of premature RA stimulation. Our results 
demonstrate that the early expression of unliganded T3R alpha functions to 
modulate the RA response and RA-stimulated neural differentiation.