The present study reports the effects of retinoic acid (RA) on cultured fetal rat hepatocytes. We show that RA treatment induces both differentiation and apoptosis. Hepatocytes cultured for 48 hours in the presence of 5 mol/L RA form junctional complexes in the areas of contact between neighboring cells and develop bile canaliculi, typical features of mature and well-differentiated cells. At the same time, about 20% of cells are induced to die by apoptosis, and the percentage of apoptotic cells increases according to the concentration of RA used and the duration of treatment. The induction of apoptosis, studied at the morphological and biochemical levels, revealed that, in our system, the classical compaction of chromatin occurs only during the final stages of the process; instead of the common marker of apoptosis, i.e., the ''DNA ladder'' pattern of fragmentation, megabase-sized fragments were found. These observations provide further evidence of the existence of fundamental differences in the mechanisms of apoptosis among cell types. To investigate the molecular mechanism of the effects of RA, we evaluated the expression of two proteins, c-myc and p53, which are known to be involved in both cell differentiation and apoptosis. The data obtained show that the amount of p53 remained unchanged after RA treatment. On the contrary, a dose-dependent reduction in c-myc levels was found, suggesting that RA action may be mediated by modulation of this oncogene. Our findings regarding the apoptosis-inducing effect of RA, which was not found in adult hepatocytes, suggest a possible relationship between this phenomenon and the proliferative capacity and/or differentiation state of hepatocytes. (HEPATOLOGY 1998;28: 727-737.) Natural and synthetic retinoids, members of the vitamin A family, are compounds with numerous pleiotropic effects.