ASC-2 (activating signal co-integrator-2) is a transcriptional co-activator that mediates the transactivation of NRs (nuclear receptors) via direct interactions with these receptors. ASC-2 contains two separate NR-interaction domains harbouring a core signature motif, LXXLL (where X is any amino acid), named the NR box. Although the first NR box (NR box-1) of ASC-2 interacts with many different NRs, the second NR box (NR box-2) specifically interacts with only LXR (liver X receptor), whose transactivation in vivo requires heterodimerization with RXR (retinoid X receptor). Interestingly, RXR has been shown to enhance the LXR transactivation, even in the absence of LXR ligand via a unique mechanism of allosteric regulation. In the present study we demonstrate that LXR binding to an ASC-2 fragment containing NR box-2 (Co4aN) is enhanced by RXR and even further by liganded RXR. We also identified specific residues in Co4aN involved in its interaction with LXR that were also required for the ASC-2-mediated transactivation of LXR in mammalian cells. Using these mutants, we found that the Co4aN-LXR interaction surface is not altered by the presence of RXR and RXR ligand and that the Ser(1490) residue is the critical determinant for the LXR-specific interaction of Co4aN. Notably the NR box-2, but not the NR box-1, is essential for ASC-2-mediated transactivation of LXR in vivo and for the interaction between LXR-RXR and ASC-2 in vitro. These results indicate that RXR does not interact directly with NR box-1 of ASC-2, but functions as an allosteric activator of LXR binding to NR box-2 of ASC-2.