RETINOIC acid, the first morphogen described so far in verteá-brates, is a vitamin A derivative which exerts striking effects on development and differentiation^1–3. The identification of three retinoic acid receptors as members of the nuclear receptor super-family provides an explanation for the molecular action of morphogens on gene expression^4–8. Functional analysis of the receptors requires the identification of target genes and of their cis-acting retinoic acid-responsive elements. We have previously shown that the retinoic acid receptor β gene is transcriptionally up-regulated by retinoic acid⁹ and now report the characterization of a functional retinoic acid responsive element in the β gene that mediates trans-activation by retinoic acid. Using deletion mapping, we have identified a 27-base pair fragment, located 59 base pairs upstream of the transcriptional start, which confers retinoic acid responsiveness on the herpes virus thymidine kinase promoter. This sequence contains a perfect direct repeat of the motif GTTCAC, which is reminiscent of the 5′ half-palindrome of the thyroid and oestrogen hormone responsive elements. Specific binding of the p protein to the retinoic acid responsive element is demonstrated and is independent of the presence of retinoic acid. Both α and β receptors enhance retinoic acid response in CV1 cells, indicating that they can both act through the same DNA sequence.