An inverted repeat with zero nucleotides in the spacer (IRO, 5'-GGGTCA CGAACT-3') element was localized in the proximal promoter region of the mouse TR2-11 gene, and characterized as a functional retinoic acid response element (RARE). In gel mobility shift assays, heterodimers of retinoic acid receptor α (RAR(α)) and retinoid X receptor β (RXR(β)) bound specifically to this element. Neither receptor alone was able to bind to this element efficiently. The dissociation constant (K(d)) with respect to RAR-RXR binding was estimated to bc 8 nM. The biological activity of this IRO element was assessed in a heterologous reporter system. The IRO-containing reporter was induced by RA in COS-1 cells in the presence of exogenously provided RAR(α) and RXR(β). In addition, the IRO oligomers could be bound by nuclear extracts isolated from COS-1 cells harboring the expression vectors for RAR(α) and RXR(β), but not by extracts isolated from control COS-1 cells. RA responsiveness of this IRO was further confirmed in P19 cells that expressed endogenous RARs and RXRs. Collectively, these data demonstrated, for the first time, the presence of a natural RARE of the IRO type, and suggested a potential cross-talk between nuclear orphan receptor TR2-11 and RAR-RXR families.