An abnormal human thyroid hormone β-receptor (hTRβ-Mf), which has a glycine to arginine substitution in the hormone-binding domain, has been identified in affected members of one family with generalized resistance to thyroid hormone. To better understand the mechanism by which this mutation produces the observed abnormality, expression vectors for the wild-type and mutant thyroid hormone receptors (TRs) were prepared to test hormone-binding activity and trans-activation function. Nuclear extracts of COS-7 cells transfected with wild-type TRs showed specific T₃-binding activity, while mutant receptor-transfected COS-7 nuclear extract failed to bind T₃. On the other hand, in a avidin-biotin complex DNA-binding assay, in vitro translated hTRβ-Mf showed high binding activity to the thyroid hormone response element, which was indistinguishable from that of wild-type TRs. In a transient expression study, only the wild-type TRs activated a rat GH gene promoter-chloramphenicol acetyltransferase fusion gene in a T₃-dependent manner. Additionally, when wild-type TR and hTRβ- Mf were cotransfected, hTRβ-Mf inhibited gene activation regulated by wild-type TRs. From these results we conclude that 1) hTRβ-Mf has no demonstrable T₃ binding and appears to have minimal, if any, ability to activate a thyroid hormone-responsive gene in spite of its preserved ability to bind to a TRE in DNA; 2) hTRβ-Mf inhibits the transcriptional activation of a thyroid hormone-responsive gene by the wild-type TRs in a dominant manner; and 3) the dominant negative regulatory function of hTRβ-Mf appears to explain the clinical manifestations of thyroid hormone resistance produced by this mutation when present in the heterozygous state.