Many cellular signals are hydrophilic and therefore cannot pass through the plasma membrane. However, small or hydrophobic signaling molecules can cross the hydrophobic core of the plasma membrane and bind to internal, or intracellular, receptors that reside within the cell. Many mammalian steroid hormones use this mechanism of cell signaling, as does nitric oxide (NO) gas.

Similar to membrane-bound receptors, binding of a ligand to a receptor located in the cytoplasm or nucleus of a cell causes a conformational change in the receptor. Like transcription factors, the active receptor can bind to receptor-specific DNA binding sites to increase or decrease the transcription of target genes. In the case of an intracellular receptor located in the cytoplasm, the receptor-ligand complex must first cross the nuclear membrane.

Many steroid hormones, including estrogen and testosterone, use intracellular receptors to induce specific effects. As an example, estrogen can diffuse across the membrane; binding of estrogen to its receptor results in dimerization of the receptors and transport of the ligand-receptor complex to the nucleus. Once in the nucleus, the complex can bind to DNA sequences called Estrogen-Response Elements (EREs). Depending on the other transcription factors and co-activators, binding of activated estrogen receptors (ERs) to EREs may cause an increase or decrease in transcription of target genes.

The activation of other intracellular receptors, including some thyroid hormone receptors, requires that ligands cross both the plasma membrane and nuclear membrane, as the corresponding receptors reside in the nucleus. These ligand-receptor complexes then can bind to DNA, similar to the mechanism described above.