Mutation of the orphan nuclear receptor RORalpha results in a severe impairment of cerebellar development by unknown mechanisms. We have found that RORalpha activates transcription from only a subset of sites to which it binds strongly as a monomer. RORalpha also selectively binds as a homodimer to a direct repeat of this monomer site with a 2-bp spacing between the AGGTCA sequences (Rev-DR2 site) and is a much more potent transcriptional activator on this site than on monomer sites or other direct repeats. To better understand the transcriptional regulatory functions of RORalpha, we fused its C terminus to a heterologous DNA-binding domain. Mutational analysis revealed that RORalpha contains both transcriptional activation and transcriptional repression domains, with the repression domain being more active in some cell types. The abilities of RORalpha polypeptides to repress transcription correlate with their abilities to interact with the nuclear receptor corepressors N-CoR and SMRT in vitro. However, the AF2 region of RORalpha inhibits corepressor interaction on DNA, consistent with the lack of repression by the full-length receptor. Thus, transcriptional regulation by RORalpha is complex and likely to be regulated in a cell type- and target gene-specific manner.