The human progesterone receptor form B (hPR-B) was expressed in Saccharomyces cerevisiae together with a specific reporter plasmid. To understand the mechanism underlying antagonist ligand activity, libraries of hormone binding domain (HBD)-mutated hPR-B molecules were prepared. A mutant receptor was identified that had lost the ability to bind either progesterone or R5020; it could still bind RU486 and, surprisingly, fully activated transcription in the presence of this "antagonist" and other antiprogestins. When this receptor mutant was assayed in mammalian cells, RU486 again demonstrated agonistic activity. Sequence analysis indicated that the mutant phenotype was due to truncation of the carboxy (C)-terminal 42 aa. We conclude that amino acids in the extreme C-terminal region are required for the receptor to bind progesterone, while antagonists bind to a site located more N-terminal of the HBD. Our results suggest that the extreme C-terminal region of the receptor contains an inhibitory function that silences receptor transactivation in the absence of agonist and in the presence of antagonist.