Thyroid hormone (T 3) activates nuclear receptor transcription factors, encoded by the TRα (NR1A1) and TRβ (NR1A2) genes, to regulate target gene expression. Several TR isoforms exist, and studies of null mice have identified some unique functions for individual TR variants, although considerable redundancy occurs, raising questions about the specificity of T 3 action. Thus, it is not known how diverse T 3 actions are regulated in target tissues that express multiple receptor variants. I have identified two novel TRβ isoforms that are expressed widely and result from alternative mRNA splicing. TRβ3 is a 44.6-kDa protein that contains an unique 23-amino-acid N terminus and acts as a functional receptor. TRΔβ3 is a 32.8-kDa protein that lacks a DNA binding domain but retains ligand binding activity and is a potent dominant-negative antagonist. The relative concentrations of β3 and Δβ3 mRNAs vary between tissues and with changes in thyroid status, indicating that alternative splicing is tissue specific and T 3 regulated. These data provide novel insights into the mechanisms of T 3 action and define a new level of specificity that may regulate thyroid status in tissue.