We have defined two principles of corepressor function that account for differences in transcriptional repression by nuclear hormone receptors (NHRs). First, we have determined that receptor stoichiometry is a crucial determinant of transcriptional repression mediated by the corepressors N-CoR and SMRT. This provides a molecular explanation for the observation that NHRs repress transcription as dimers but not monomers. Second, corepressor function is restricted by steric effects related to DNA binding in a receptor-specific manner. Thus, although N-CoR and SMRT are capable of binding to several NHRs in solution, they are highly selective about receptor binding on DNA, a context that reflects their in vivo function more accurately. These stoichiometric and steric principles govern specific interactions between corepressors and NHRs, thus providing evidence that N-CoR and SMRT do not serve redundant functions but rather contribute to receptor-specific transcriptional repression.