Retinoic acid (RA), a metabolite of vitamin A, is known to be a key signaling molecule in regulating epithelial cell differentiation. We recently characterized and cloned a retinal dehydrogenase (RALDH) that catalyzes the oxidation of retinal to RA. In this study, we investigated the effects of retinoids on the level of RALDH mRNA and protein as well as RALDH activity in the trachea and cultured tracheal epithelial cells. Vitamin A deficiency induced squamous metaplasia in the tracheal epithelium and down-regulated RALDH expression. Supplementation of retinol and retinoic acid to vitamin A deficient rats restored the normal mucociliary epithelium and up-regulated the RALDH expression. In rat epithelial cells cultured in vitro, RA inhibited squamous differentiation and promoted mucociliary differentiation. Squamous differentiated cultures (RA-) expressed very low levels of RALDH mRNA, whereas mucociliary differentiated cultures (RA+) expressed high levels of RALDH mRNA. Retinal and retinol were poor inducers of mucociliary differentiation as well as RALDH expression. The RALDH expression paralleled the expression of the mucin-1 gene in mucociliary cultures. These results suggest that the expression of RALDH is dependent on the differentiation state of the airway epithelium.