Transcriptional silencing mediated by nuclear receptors is important in development, differentiation and oncogenesis. The mechanism underlying this effect is unknown but is one key to understanding the molecular basis of hormone action. Here we identify a receptor-interacting factor, SMRT, as a silencing mediator (co-repressor) for retinoid and thyroid-hormone receptors. SMRT is a previously undiscovered protein whose association with receptors both in solution and bound to DNA-response elements is destabilized by ligand. The interaction with mutant receptors correlates with their transcriptional silencing activities. In vivo, SMRT functions as a potent co-repressor, and a GAL4 DNA-binding domain fusion of SMRT behaves as a frank repressor of a GAL4-dependent reporter. Together, our results identify a new class of cofactors which may be important mediators of hormone action.