All-trans retinoic acid (RA) exerts profound effects on the growth and differentiation of normal, embryonic, and malignant cells. The effects of RA are mediated through multiple members of the retinoic acid receptor (RAR) and retinoid X receptor (RXR) families of nuclear transcription factors. The RARs and RXRs exhibit specific patterns of expression during development and in adult tissues suggesting tissue or cell-type specific functions. Using NTera2/clone D1 (NT2/D1) human embryonal carcinoma cells as a model, we report that the RA induced terminal differentiation of these cells into a neuronal phenotype is characterized by an increase in expression of RAR alpha, RAR beta, RAR gamma, and a slight induction of RXR alpha. To study the role of these receptors in the differentiation process we individually overexpressed RAR alpha, beta, gamma and RXR alpha in NT2/D1 cells by cDNA transfection. Using induced cDNA expression by episomal vector amplification we show that RAR gamma over-expression causes the terminal mesenchymal differentiation of these cells while over-expression of RAR alpha, beta and RXR alpha has no observed maturation or growth inhibitory effects. Over-expression of these receptors in the derived RA resistant subclone NT2/D1-R1 showed phenotypic changes characteristic of RA response in RAR gamma transfectants. These studies indicate that of the retinoid receptors expressed in RA-treated NT2/D1 cells, it is the upregulation of RAR gamma that specifically induces the terminal differentiation of these cells.