Mammalian class I aldehyde dehydrogenase (ALDH) plays an important role in the biosynthesis of the hormone retinoic acid (RA), which modulates gene expression and cell differentiation. RA has been shown to mediate control of human ALDH1 gene expression through modulation of the retinoic acid receptor alpha (RARalpha) and the CCAAT/enhancer binding protein beta (C/EBPbeta). The positive activation of these transcription factors on the ALDH1 promoter is inhibited by RA through a decrease of C/EBPbeta binding to the ALDH1 CCAAT box response element. However, the mechanism of this effect remains unknown. Here we report that the RARalpha/retinoid X receptor beta (RXRbeta) complex binds to the mouse retinaldehyde dehydrogenase 1 (Raldh1) promoter at a non-consensus RA response element (RARE) with similar affinity to that of the consensus RARE. We found that C/EBPbeta binds to a Raldh1 CCAAT box located at -82/-58bp, adjacent to the RARE. Treatment with RA increases GADD153 and GADD153-C/EBPbeta interaction resulting in a decreased cellular availability of C/EBPbeta for binding to the Raldh1 CCAAT box. These data support a model in which high RA levels inhibit Raldh1 gene expression by sequestering C/EBPbeta through its interaction to GADD153.