Retinoic acid receptors (RARs) are important mediators of retinoid signaling in morphogenesis, development, and cell differentiation. Three major isotypes of RARs, denoted α, β, and γ, have been identified, each encoded by a distinct genetic locus. Although RARα, RARβ, and RARγ share many structural and functional features, these three isotypes are known to play unique, as well as overlapping, roles in physiology and development. We report here that the three RAR isotypes display different transcriptional properties in the absence of hormone ligand; under these conditions, RARα is a strong repressor of target gene expression, whereas both RARβ and RARγ fail to repress and instead are able to mediate substantial levels of hormone-independent transcriptional activation. These differing transcriptional properties appear to reflect the differing abilities of the three RAR isotypes to interact with the SMRT (silencing mediator of retinoic acid and thyroid hormone receptor) corepressor protein: RARα binds to SMRT strongly both in vitro and in vivo, whereas RARβ and RARγ interact only weakly with SMRT. The ability to repress or to activate transcription in the absence of hormone maps predominantly to isotype-specific differences in the sequence of helix 3 within the hormone binding domain of the RARs, and the transcriptional properties of one isotype can be exchanged with that of another by exchanging portions of helix 3. The different transcriptional properties of RARα, RARβ, and RARγ in the absence of hormone contribute to the distinctive biological functions of these proteins and provide a rationale for the strong conservation of the three distinct isotypes during the vertebrate evolutionary radiation.