The nuclear receptor farnesoid X receptor alpha (FXRalpha, NR1H4) is activated by bile acids in multiple species including mouse, rat, and human and in this study we have identified two isoforms of Fxralpha in Japanese medaka (Oryzias latipes), a small freshwater teleost. Both isoforms share a high amino acid sequence identity to mammalian FXRalpha (approximately 70% in the ligand-binding domain). Fxralpha1 and Fxralpha2 differ within the AF1 domain due to alternative splicing at the fourth intron-exon boundary. This process results in Fxralpha1 having an extended N-terminus compared to Fxralpha2. A Gal4DBD-FxralphaLBD fusion construct was activated by chenodeoxycholic, cholic, deoxycholic and lithocholic acids, and the synthetic agonist GW4064 in transient transactivation assays. Activation of the Gal4DBD-FxralphaLBD fusion construct was enhanced by addition of PGC-1alpha, as demonstrated through titration assays. Surprisingly, when the full-length versions of the two Fxralpha isoforms were compared in transient transfection assays, Fxralpha2 was activated by C(24) bile acids and GW4064, while Fxralpha1 was not significantly activated by any of the compounds tested. Since the only significant difference between the full-length constructs was sequence in the AF1 domain, these experiments highlight a key functional region in the Fxralpha AF1 domain. Furthermore, mammalian two-hybrid studies demonstrated the ability of Fxralpha2, but not Fxralpha1, to interact with PGC-1alpha and SRC-1, and supported our results from the transient transfection reporter gene activation assays. These data demonstrate that both mammalian and teleost FXR (Fxralpha2 isoform) are activated by primary and secondary bile acids.