Multiple thyroid hormone (T3; L-3,3',5-triiodothyronine) receptors related to the viral oncogene v-erbA have been identified in mammalian tissues and have been shown to mediate certain actions of T3. The role of a carboxyl-terminal variant of alpha-type c-erbA (c-erbA alpha-2) is controversial, since the human form has been reported to be a T3 receptor, while the rat form has been shown to not bind T3. In fact, the rat homolog of c-erbA alpha-2 has been reported to be an inhibitor of T3 action. We have compared the properties of human c-erbA alpha-2 with those of its rat homolog and with other forms of c-erbA. Neither form of c-erbA alpha-2 binds T3 with high affinity whether synthesized in reticulocyte lysates or by transient expression in mammalian cells. Also, neither form increases the expression of a T3-responsive gene. However, human c-erbA alpha-2 inhibits T3 action mediated by a T3-receptor form of c-erbA to an extent similar to that of rat c-erbA alpha-2. Our data strongly suggest that human c-erbA alpha-2 has a biological function similar to that of its rat homolog. Thus, the modulation of T3 action by an endogenous inhibitor related to T3 receptors is likely a general regulatory mechanism.