The polymorphic nature of sequences which act as retinoic acid response elements (RAREs and RXREs) in transactivation assays in mammalian cells, suggests that elements consisting of a direct repetition of a half site motif, separated by 1 to 5 base pairs (DR1 to DR5), are targets for retinoic acid (RA) signalling. In a previous report we showed that in yeast cells, heterodimers of the retinoic acid receptors RAR alpha and RXR alpha were required for efficient transcription of a reporter gene containing a DR5 element [Heery et al., (1993); Proc. Natl. Acad. Sci. USA, 90: 4281-4285]. Here we report that DR1 to DR5 elements containing a direct repeat of the 5'-AGGTCA-3' motif, and an inverted repeat of the same sequence with no spacer (IR0), behave as RAREs in yeast cells coexpressing RAR alpha and RXR alpha, albeit with different efficacies. Heterodimer activity was strongest on a DR5 reporter gene, and the strength of activation of the reporter series (DR5 > DR1 > DR3 > DR2 = IR0 = DR4) correlated with the ability of the heterodimer to bind to the corresponding sequences in vitro. Significantly, a reporter containing a DR1 element was selectively and efficiently activated in yeast cells expressing only RXR alpha. This activity was dependent on the induction by 9-cis retinoic acid of an activation function (AF-2) located in the RXR alpha ligand binding domain. In addition, a strong synergistic activity of RXR alpha was observed on a reporter containing the putative RXR element (RXRE) from the rat CRBPII gene promoter. Thus, RXR alpha can function independently as a transcription factor, in the absence of RARs or other heteromeric partners. Similarly, homodimers of RAR alpha selectively stimulated the transcription of a DR5 reporter in a ligand-dependent manner, but less efficiently than RAR alpha/RXR alpha heterodimers.