Malformations in the eye can be caused by either an excess or deficiency of retinoids. An early target gene of the retinoid metabolite, retinoic acid (RA), is that encoding one of its own receptors, the retinoic acid receptor  (RAR). To better understand the mechanisms underlying this autologous regulation, we characterized the chick RAR2 promoter. The region surrounding the transcription start site of the avian RAR2 promoter is over 90% conserved with the corresponding region in mammals and confers strong RA-dependent transactivation in primary cultured embryonic retina cells. This response is selective for RAR but not retinoid X receptor-specific agonists, demonstrating a principal role for RAR(s) in retina cells. Retina cells exhibit a far higher sensitivity to RA than do fibroblasts or osteoblasts, a property we found likely due to expression of the orphan nuclear receptor TLX. Ectopic expression of TLX in fibroblasts resulted in increased sensitivity to RA induction, an effect that is conserved between chick and mammals. We have identified a cis element, the silencing element relieved by TLX (SET), within the RAR2 promoter region which confers TLX- and RA-dependent transactivation. These results indicate an important role for TLX in autologous regulation of the RAR gene in the eye.