Thyroid hormones are thought to modulate gene expression positively or negatively through interactions with chromatin-associated receptors¹. Recently, the c-erbA proto–oncogene products have been shown to be nuclear thyroid hormone (T₃) receptors (TR)^2–5 by sequence similarity with other steroid receptors and by their ability to bind thyroid hormone. But it has not been shown that these receptors directly activate transcription of the responsive genes in vivo. In addition, the rat TRα gene encodes several messenger RNA (mRNA) species, generated by differential processing of its transcripts (ref. 22). For these reasons we investigated the ability of two major isoforms of the rat TRa gene products to activate transcription of a sarcomeric myosin heavy chain (mHC) gene, because expression of all members of this gene family is responsive to T⁶₃. We show here that the rTRα1 receptor is a thyroid hormone-dependent transcriptional factor, which upon binding the T₃ responsive element of the α-mHC gene, activates expression of this gene in vivo. The rTRα2 isoform, which is identical to rTRα1 except for its carboxyl terminal portion, is generated by alternative splicing of the rTRα gene transcript. This peptide, when produced in vitro and in vivo failed to bind T₃ or other hormones or to trans-activate α-mHC gene expression. Thus, alternative splicing can produce marked differences in the functional properties of a transcriptional factor.