The vitamin A derivative retinoic acid is known to be a potent agent for control of differentiation and proliferation of epithelial cells and to exert profound effects on pattern formation during embryogenesis. Its action at the molecular level appears to be mediated by two distinct classes of proteins: a family of nuclear receptors that regulates gene transcription in a ligand-dependent fashion and a small cellular retinoic acid-binding protein (CRABP) for which a precise function remains to be elucidated. In this report, we describe the identification (by molecular cloning of its cDNA) of an isoform of CRABP, referred to as CRABP-II, expressed at high levels during mouse embryogenesis and in adult skin. We also show that CRABP-II mRNA levels are induced by at least 50-fold upon treatment of F9 teratocarcinoma cells with retinoic acid. The up-regulation of the gene encoding CRABP-II by its ligand suggests that CRABP-II might be involved in a feedback regulatory role in the mechanism of action of retinoic acid on cellular differentiation.