We have analyzed the functional domains of the Drosophila orphan receptor Ultraspiracle (usp), a homologue of the vertebrate retinoic X receptor alpha, as well as the ability of heterodimers between usp and the thyroid hormone receptor beta (T3Rbeta) to transactivate the human apolipoprotein A-II (apoA-II) promoter. DNA binding assays demonstrated that heterodimers of usp and the human T3Rbeta can bind to the hormone response element (HRE) of the regulatory element AIIJ (-734 to -716) of the human apoA-II promoter. Cotransfection experiments have shown that the combination of usp and T3Rbeta can transactivate the human apoA-II promoter in COS-1 cells 7-8-fold in the presence of thyroid hormone (T3). The observed transactivation was not affected by the deletion of the amino-terminal residues 1-85 of usp, which represent a putative transactivation domain, suggesting that the function of usp is to recruit T3Rbeta. Furthermore, a mutant usp, with impaired DNA binding properties, can form heterodimers with T3Rbeta in vitro but has reduced ability to transactivate the human apoA-II promoter. A minimal thymidine kinase (tk) promoter driven by four AIIJ regulatory elements is repressed to 20% of its original activity by T3Rbeta and the repression is relieved by usp/T3Rbeta heterodimers. Deletion analysis demonstrated that factors bound to the regulatory elements AIIJ, AIIAB, and AIIH participate in the usp/T3Rbeta-mediated transactivation of the human apoA-II promoter. Similarly to element AIIJ, element AIIAB binds usp/T3Rbeta heterodimers, whereas element AIIH binds a COS-1 nuclear activity that is supershifted with anti-hepatic nuclear factor 1 antibodies. The findings suggest that optimal transactivation of the apoA-II promoter by usp/T3Rbeta heterodimers requires complex interactions between these heterodimers and factors bound to other regulatory elements. The observed transcriptional activation through heterodimer formation between nuclear receptors from species as divergent in the evolutionary scale as insects and mammals indicates that the functional domains of these proteins have been highly conserved.