Rev-Erb is an orphan nuclear receptor which binds as a monomer to the thyroid/retinoic acid receptor half-site AGGTCA flanked 5′ by an A/T-rich sequence, referred to here as a Rev monomer site. Fusion of Rev-Erb to the DNA binding domain of yeast GAL4 strongly repressed basal transcription of a GAL4-luciferase reporter gene as a result of the presence of a C-terminal domain containing both the hinge and heptad repeat regions. Nevertheless, wild-type Rev-Erb did not repress basal transcription from the Rev monomer binding site. Therefore, a DNA binding site selection strategy was devised to test the hypothesis that Rev-Erb may function on a different site as a dimer. This approach identified sequences containing two Rev monomer sites arranged as direct repeats with the AGGTCA motifs separated by 2 bp (Rev-DR2). Remarkably, Rev-Erb bound as a homodimer to Rev-DR2 but not to other direct repeats or to a standard DR2 sequence. The DNA binding domain contained all of the determinants for Rev-DR2-specific homodimerization. Rev-Erb bound cooperatively as a homodimer to Rev-DR2, and this interaction was 5 to 10 times more stable than Rev-Erb monomer binding to the Rev monomer site. Functionally, Rev-Erb markedly repressed the basal activity of a variety of promoters with a strong Rev-DR2 specificity. The C terminus was required for this repression, consistent with the GAL4 results. However, the Rev-DR2 specificity did not require the C terminus in vivo, since fusion of C-terminally truncated Rev-Erb to a heterologous transactivation domain created a transcriptional activator specific for Rev-DR2. In addition to idealized Rev-DR2 sites, Rev-Erb also repressed basal as well as retinoic acid-induced transcription from a naturally occurring Rev-DR2 in the CRBPI gene. Thus, although Rev-Erb is distinguished from other thyroid/steroid receptor superfamily members by its ability to bind DNA as a monomer, it functions as a homodimer to repress transcription of genes containing a novel DR2 element.