Mammalian alcohol dehydrogenase (ADH) catalyzes the oxidation of retinol to retinaldehyde, the rate-limiting step in the synthesis of retinoic acid. There exists a family of ADH isozymes encoded by unique genes, and it is unclear which isozymes are most important for regulation of retinoic acid synthesis during differentiation or development. A region in the human ADH3 promoter from -328 to -272 base pairs was shown previously to function as a retinoic acid response element (RARE), prompting an hypothesis for a positive feedback mechanism controlling retinoic acid synthesis (Duester, G., Shean, M. L., McBride, M. S., and Stewart, M. J. (1991) Mol. Cell. Biol. 11, 1638-1646). The ADH3 RARE contains three direct AGGTCA repeats which constitute the critical nucleotides of RAREs present in other genes. We dissected the ADH3 RARE and determined that receptor binding as well as transactivation are dependent upon only the two downstream AGGTCA motifs separated by 5 base pairs, a structure noticed previously for a RARE in the promoter for the retinoic acid receptor-beta (RAR-beta) gene. ADH3 and RAR-beta RAREs functioned similarly in transfection assays, suggesting that the feedback mechanisms controlling ADH3 and RAR-beta utilize a common RARE. We also found that the normal functioning of the ADH3 RARE was abrogated by thyroid hormone receptor in the presence of thyroid hormone. A negative thyroid hormone response element in the human ADH3 promoter was found to colocalize with the RARE. Since ADH production in rat liver is known to be repressed by thyroid hormone, these findings suggest that human ADH production may also be subject to thyroid hormone repression and that the mechanism involves an interference with retinoic acid induction.