Prolactin gene expression is negatively regulated by glucocorticoids, and by estrogens when positive estrogen regulatory elements in the prolactin gene are removed. Mutational analysis of estrogen receptor confirms that inhibition is a function of receptor, and that transcriptional activation and inhibition require distinct, separable structural elements. Inhibition is dependent on a 63 amino acid region (amino acids 251-314) distinct from the DNA-binding and steroid-binding domains. The comparable region of glucocorticoid receptor confers inhibitory actions on a hybrid receptor. Multiple, nonoverlapping sequences in the rat prolactin 5'-flanking genomic region that confer inhibition by both steroid hormones contain related cis-active elements that bind a common, tissue-specific positive transcription factor, called Pit-1. Experimental results indicate that positive and negative transcriptional effects of estrogen receptor are mediated by separate functional domains, and suggest the protein-protein interactions between steroid hormone receptors and other transcription factor(s) mediate inhibition.