The physiologic role(s) of cellular retinol-binding protein (CRBP)-III, an intracellular retinol-binding protein that is expressed solely in heart, muscle, adipose, and mammary tissue, remains to be elucidated. To address this, we have generated and characterized CRBP-III-deficient (CRBP-III(-/-)) mice. Mice that lack CRBP-III were viable and healthy but displayed a marked impairment in retinoid incorporation into milk. Milk obtained from CRBP-III(-/-) dams contains significantly less retinyl ester, especially retinyl palmitate, than milk obtained from wild type dams. We demonstrated that retinol bound to CRBP-III is an excellent substrate for lecithin-retinol acyltransferase, the enzyme responsible for catalyzing retinyl ester formation from retinol. Our data indicated that the diminished milk retinyl ester levels arise from impaired utilization of retinol by lecithin-retinol acyltransferase in CRBP-III(-/-) mice. Interestingly, CRBP-I and CRBP-III each appeared to compensate for the absence of the other, specifically in mammary tissue, adipose tissue, muscle, and heart. For CRBP-III(-/-) mice, CRBP-I protein levels were markedly elevated in adipose tissue and mammary gland. In addition, in CRBP-I(-/-) mice, CRBP-III protein levels were elevated in tissues that normally express CRBP-III but were not elevated in other tissues that do not normally express CRBP-III. Our data suggested that CRBP-I and CRBP-III share some physiologic actions within tissues and that each can compensate for the absence of the other to help maintain normal retinoid homeostasis. However, under conditions of high demand for retinoid, such as those experienced during lactation, this compensation was incomplete.