Thyroid hormone receptor α (TRα) and the oncoprotein v-erbA (a mutated form of TRα incapable of binding T3) bind as heterodimers with retinoid X receptor (RXR) to DNA sequences with different orientations of AGGTCA half sites. v-erbA can also form homodimers, whereas, TRα1 homodimerizes poorly. Therefore, in order to obtain a better understanding for the distinct homodimerization properties between TRα1 and v-erbA, we created chimeras between these two receptors and tested their abilities to homodimerize on direct and everted repeats (DRs, ERs). We found that the enhanced homodimerization properties of v-erbA compared to TRα1 map to isoleucine at position 339 in conjunction with serine at position 351 and alanine at position 358. Our data indicate that the methyl group in isoleucine at position 339 plays an important role in v-erbA homodimerization, particularly on ER 6. Functional studies with I339V+S351P+A358T, a v-erbA mutant unable to homodimerize but still able to heterodimerize with RXR on ERs and DRs, indicate that v-erbA-RXR heterodimers mediate the dominant negative activity of v-erbA on DRs. However, the repressor activity of this mutant is weaker than that of the wild type v-erbA on ERs, suggesting that v-erbA homodimers rather than v-erbA-RXR heterodimers mediate the potent dominant negative activity of v-erbA on ERs.