Two sorts of proteins bind to, and mediate the developmental and homeostatic effects of, retinoic acid (RA): the RAR and RXR nuclear receptors, which act as ligand-dependent transcriptional regulators, and the cellular RA binding proteins (CRABPI and CRABPII). CRABPs are generally known to be implicated in the synthesis, degradation, and control of steady-state levels of RA, yet previous and recent data have indicated that they could play a role in the control of gene expression. Here we show for the first time that, both in vitro and in vivo, CRABPII is associated with RARalpha and RXRalpha in a ligand-independent manner in mammalian cells (HL-60, NB-4, and MCF-7). In the nucleus, this protein complex binds the RXR-RAR-specific response element of an RA target gene (RARE-DR5). Moreover, in the presence of retinoids that bind both the nuclear receptors and CRABPII, enhancement of transactivation by RXRalpha-RARalpha heterodimers is observed in the presence of CRABPII. Thus, CRABPII appears to be a novel transcriptional regulator involved in RA signaling.