Lipid-soluble hormones diffuse across the plasma and nuclear membrane of target cells to bind to their specific intracellular receptors. These receptors act as transcription factors that regulate gene expression and protein synthesis in the target cell

Based on their mode of action, intracellular hormone receptors are classified as Type I or Type II receptors. Type I receptors, including steroid hormone receptors such as the androgen receptor, are present in the cytoplasm. Hormone binding transports the hormone-receptor complex to the nucleus, where it binds to regulatory DNA sequences called hormone response elements and activates gene transcription.

Type II receptors, such as the thyroid hormone receptor, are bound to their DNA response elements within the nucleus even in the absence of hormone. In this state, the receptor acts as an active repressor of transcription. However, upon hormone binding, the receptor-hormone complex activates transcription of thyroid hormone-inducible genes.