Retinoids are important regulators of the growth and differentiation of tracheobronchial epithelial cells. To determine the mechanism of action of retinoids in these cells, we began to examine the expression of nuclear retinoic acid receptors (RARs) in normal human and rabbit tracheobronchial epithelial (HBE and RbTE, respectively) cells and in several lung carcinoma cell lines. A specific nuclear RAR-binding activity with a molecular weight of 50,000 was identified in these cells. A correlation was found between the binding of several retinoids to this RAR and their ability to inhibit transglutaminase Type I activity. Normal HBE and RbTE cells contained two RAR alpha mRNA transcripts, 2.6 and 3.5 kb in size, and one 3.1 kb RAR gamma transcript. RAR beta transcripts were undetectable in HBE cells. RAR expression was unchanged during squamous differentiation. Treatment of HBE and RbTE cells with 100 nM retinoic acid increased RAR beta mRNA expression but did not change the levels of RAR alpha and RAR gamma. In contrast, retinoic acid suppressed in these cells the level of involucrin, transglutaminase Type I, and SQ37 mRNA. In comparison with normal HBE cells, certain lung carcinoma cell lines appear to have an altered expression of RAR beta and RAR gamma. Human bronchial fibroblasts (HBF) expressed RAR alpha and RAR gamma transcripts of the same size as HBE cells. HBF cells contain low levels of a 2.9- and 3.3-kb RAR beta mRNA. Treatment of HBF cells with retinoic acid increased the level of RAR beta mRNA in a time-dependent manner; the maximal induction was about 15-fold. On the basis of these findings we hypothesize that RARs are involved in the suppression of squamous differentiation in tracheobronchial epithelial cells and that lung fibroblasts are target cells for retinoids.