Retinoic acid (RA) is a key molecule signalling pattern formation in the developing vertebrae, limbs, and nervous system. Branching morphogenesis of the lung requires interactions between the developing epithelium and mesenchyme. Sonic hedgehog (SHH), a secreted glycoprotein involved in pattern formation, is present in the epithelium of the developing mouse lung, with greatest abundance in the terminal buds. Patched (PTC), a transmembrane protein and potential receptor for SHH, is expressed in the mesenchyme adjacent to terminal end buds in the developing mouse lung. Based on data in the limb that links retinoid signal transduction to SHH signal transduction, we hypothesized that RA participates in the regulation of the genes shh and ptc. To test this hypothesis, embryonic rat lungs were collected on day 11.512.0 post coitus (p.c.) and were cultured in serumfree medium with and without supplemental RA, dose 106108 M, for 96 hours. Embryonic rat lungs were collected on days 13.5 and 15.5 p.c. to serve as in vivo controls. After 96 hours in culture, explants were pooled from each experimental treatment as well as from in vivo controls for total RNA isolation and northern blot hybridization with the radiolabeled cDNAs specific for mouse shh and ptc. Steady state levels of shh and ptc mRNA were comparable between the in vivo controls and explants maintained in serumfree medium alone for 96 hours. Culture of day 11.512.0 p.c. rat lung in RA for 96 hours resulted in a dosedependent increase in steady state levels of both shh and ptc mRNA, although the doseresponse curves differed. The relative abundance of shh mRNA increased 23x in response to RA, with maximal stimulation at 106M RA whereas levels of ptc mRNA increased 22.5x, with maximal stimulation at 107/8M RA. Consistent with other published results, higher concentrations of RA (106M) reduced branching of fetal rat lung explants whereas intermediate concentrations of RA(107/8M) appeared to stimulate branching. We conclude that retinoic acid is capable of upregulating the genes shh and ptc in the developing lung in vitro. We speculate that endogenous RA participates in the regulation of these genes which are present in the developing lung and which may play a role in coordinating proximaldistal patterning of the lung. (Supported in part by American Lung Association Research Grant).