Retinoic acid (RA) has been shown to have variable effects on myogenic differentiation in cell culture. The application of RA on primary cultures of embryonic somites, limb buds, and neonatal limbs inhibited myogenic differentiation in a dose-dependent way as indicated by the repression of: (a) myotube formation, (b) myosin heavy chain protein accumulation, (c) myosin light chain (MLC) 1/3, alpha sk-actin and myogenic factor transcript expression. Expression of retinoic acid receptors (RAR) was also affected by RA treatment, specifically RAR gamma transcripts were induced. To further understand the pleiotropic action of RA on myogenesis, we took advantage of two muscle-specific transgene markers which consisted of CAT reporter genes driven by regulatory elements either from the myosin light chain 1/3 locus (MLC-CAT) or the alpha-skeletal actin gene (alpha sk actin-CAT). RA inhibited MLC-CAT transgene but not alpha sk actin-CAT transgene expression in primary cultures from these mice. Analysis of MLC-CAT expression in transgenic mouse primary cultures and in stably transfected C2C12 cells demonstrated that repression of MLC-CAT activity by RA was dependent upon diffusible factors in chick embryo extract. We hypothesize that during development, the pleiotropic effects of RA on myogenesis do not depend solely on the distribution and concentration of RA itself, but are also influenced by extracellular signals in the embryonic environment.