The expression of retinoic acid receptor beta2 (RAR-beta2) is frequently lost in various cancers and their premalignant lesions. However, the restoration of RAR-beta2 expression inhibits tumor cell growth and suppresses cancer development. To understand the molecular mechanisms responsible for this RAR-beta2-mediated antitumor activity, we did restriction fragment differential display-PCR and cloned a novel retinoid receptor-induced gene 1 (RRIG1), which is differentially expressed in RAR-beta2-positive and RAR-beta2-negative tumor cells. RRIG1 cDNA contains 2,851 bp and encodes a protein with 276 amino acids; the gene is localized at chromosome 9q34. Expressed in a broad range of normal tissues, RRIG1 is also lost in various cancer specimens. RRIG1 mediates the effect of RAR-beta2 on cell growth and gene expression (e.g., extracellular signal-regulated kinase 1/2 and cyclooxygenase-2). The RRIG1 protein is expressed in the cell membrane and binds to and inhibits the activity of a small GTPase RhoA. Whereas induction of RRIG1 expression inhibits RhoA activation and f-actin formation and consequently reduces colony formation, invasion, and proliferation of esophageal cancer cells, antisense RRIG1 increases RhoA activity and f-actin formation and thus induces the colony formation, invasion, and proliferation of these cells. Our findings therefore show a novel molecular pathway involving RAR-beta2 regulation of RRIG1 expression and RRIG1-RhoA interaction. An understanding of this pathway may translate into better control of human cancer.