In this study, we identify and characterize a novel gene, CL-20, that encodes a 17.8-kDa protein with sequence and structural similarity to the growth arrestspecific gene gas3/peripheral myelin protein gene PMP22. The CL-20 protein exhibits a 43% identity with PMP22. The positions of the four lipophilic domains and the N-glycosylation site of PMP22 are conserved in CL-20, suggesting that it also is an integral membrane glycoprotein. The CL-20 gene is located on human chromosome 12 rather than 17 and encodes a 2.8-kilobase mRNA instead of 1.7-kilobase mRNA. These observations indicate that the CL-20 gene is related to but distinct from PMP22. In contrast to PMP22, CL-20 mRNA and protein are induced during squamous differentiation of rabbit tracheal epithelial cells in vitro, and Northern blot analysis and in situ hybridization demonstrated that CL-20 mRNA is most abundant in squamous epithelia. These results indicate that the high expression of CL-20 is closely correlated with squamous differentiation. The differences in tissue-specific expression and regulation between CL-20 and PMP22 suggest different roles for these two proteins. Retinoids, which inhibit squamous differentiation, repress the induction of CL-20. The retinoic acid receptor-selective retinoid SRI-6751-84 is the most effective in suppressing CL-20, suggesting that the activation of the retinoic acid receptor signaling pathway is important in this suppression.Squamous differentiation can be observed in many tissues including the trachea, bronchus, and skin. The lining of the trachea and bronchi normally consists of a pseudostratified columnar epithelium (1). During vitamin A deficiency or after toxic assault or mechanical injury (2-4), regions of the mucociliary epithelium are replaced by a stratified squamous epithelium. Tracheobronchial epithelial cells also undergo squamous differentiation when cultured in medium deficient in retinoids (5-7). In many respects, squamous differentiation in the tracheobronchial epithelial cells resembles differentiation in epidermal keratinocytes and other squamous differentiating tissues (8). The histologically distinct layers constituting the squamous epithelium (8) exhibit distinctive patterns of expression of specific genes and are evidence that squamous differentiation is a multistage process (5, 9, 10). Early in this differentiation process, cells irreversibly lose their proliferative potential and down-regulate the expression of the cell cycleassociated genes cdc2 and E2F-1 (11, 12). This is followed by the expression of squamous-specific genes such as transglutaminase type I (7, 13-15), the cross-linked envelope precursors involucrin, loricrin, and cornifin (16 -19), cholesterol sulfotransferase (20), and specific keratins (9, 21). These genes have been cloned and are shown to be regulated by a variety of agents including retinoids, which suppress the expression of squamous-specific genes (7-21).In this study, we describe the isolation and characterization of a cDNA CL-20 that was isolated from a cDNA libra...