N-CoR and SMRT are transcriptional corepressors that associate with nuclear hormone receptors (NRs) in the absence of ligand. This interaction is the molecular target of differentiation therapy for acute promyelocytic leukaemia, wherein retinoic acid dissociates corepressor from leukaemogenic receptor fusion proteins^,. Binding of ligand to NRs induces a conformation that attracts coactivator proteins containing an Leu-x-x-Leu-Leu motif (the ‘NR box’)^,. Here we show that N-CoR and SMRT contain sequences that are similar to the NR box and are repeated in each of two NR interaction domains^,,,. We show that this CoRNR (‘corner’) box is required for NR interaction, and that CoRNR box peptides specifically block corepressor interaction in vitro and repression in vivo. Sequences flanking the CoRNR box determine NR specificity. Thus, the key feature of hormone action, differential recognition of unliganded and liganded NRs by coactivators and corepressors, is due to very subtle differences between CoRNR and NR boxes. The molecular mechanisms of repression and activation by NRs are thus linked in an unexpected manner.