Retinoic acid (RA) has both morphogenetic and gene regulatory properties. We hypothesized that RA may act as an epigenetic signaling agent in branching morphogenesis of the lung. The following studies were conducted to determine the dose response of RA treatment on embryonic rat lung explants with respect to branching morphogenesis. lung cell differentiation as determined by routine light microscopy, and the expression of cellular retinol-binding protein(CRBP). a mediator of retinoid function. Embryonic rat lungs were collected on gestational day 11.5-12.0 (term = 22 days) and cultured in a serum-free medium. Experimental manipulation of the culture system consisted of addition of 10-6-10-8M RA beginning 3-4 hours after initial culture and every 24 hours thereafter for 96 hours. Control explants were maintained in medium alone for 96 hours. Embryonic rat lungs were collected also on gestational day 13.0 as an in vivo control. All explants were photographed daily for 72 hours. Explants from similar treatment groups were pooled at 96 hours for RNA isolation for northern blot hybridization with the rat cDNA for CRBP. The general growth of the explants was comparable in the four groups at 72 hours. There were no significant differences in number of end buds in RA-treated explants relative to controls at 24 hours. By 48 hours, however, the number of end buds was significantly increased in each group of RA-treated explants relative to controls (C=9.2±0.9, 10-6M RA=14.9±1.4*. [Illegible Text] RA=15.9±1.5*. 10-8M RA=16.1±1.4*, where *P≤0.001). At 72 hours, only explants treated with 10-8M RA demonstrated increased end buds relative to controls (C=31.6±3.2, 10-8M RA=55.9±3.9,P≤0.001). Light microscopy demonstrated that airway epithelium was more cuboidal with some cilia and fewer cytoplasmic vacuoles in explants treated with 10-6M RA. CRBP mRNA was detected in the day 13.0 lungin vivo and remained in control explants maintained in culture for 96 hours. CRBP mRNA abundance increased 2-3 fold in response to RA at all concentrations utilized. We conclude that 1) RA treatment of embryonic rat lung explants appears to increase branching morphogenesis and airway epithelial differentiation over a 72-hour period. and 2) early embryonic rat lungs contain mRNA for CRBP and that RA increases the expression of this genein vitro. These data support a role for retinoids, specifically RA, in early lung development. (Supported by American Lung Association Research Grant).