Retinoids are a class of compounds structurally related to vitamin A. In preclinical studies, all-trans retinoic acid (tretinoin), 13-cis retinoic acid (isotretinoin) and the aromatic retinoids etretinate and acitretin have preventive and therapeutic effects on carcinogen-induced premalignant and malignant lesions. Clinically, chemoprevention with isotretinoin and etretinate has been tested with some degree of success in such indications as basal cell carcinomas, squamous cell carcinomas, superficial bladder tumors and second primary tumors in patients with squamous cell carcinoma of the head and neck. Limited therapeutic success has also been achieved with retinoid treatment of precancerous and cancerous conditions of the skin, oral cavity, larynx, lung, bladder and vulva. Dramatic therapeutic effects have been observed in the treatment of acute promyelocytic leukemia with tretinoin, which leads to very high rate of complete remission. Excellent results were recently reported in the treatment of squamous cell carcinomas of the skin and cervix with a combination of isotretinoin and recombinant interferon alfa-2a (rIFN alfa-2a, Roferon-A). The mechanism of action of retinoids is through modulation of cell proliferation and differentiation. Retinoids vary in their capacity to induce differentiation and to inhibit proliferation in a series of human transformed hematopoietic and epithelial cell lines. Some cytokines potentiate the retinoid-induced cell differentiation and act synergistically with retinoids to inhibit cell proliferation. The pattern of synergism is dependent upon the combination and tumor cell line tested. The discovery of nuclear retinoid receptors has contributed substantially to the understanding of the mechanism of action of retinoids at the molecular level. Further understanding of the molecular biology of retinoids is expected to contribute to a rational design of new retinoids in the future, which in turn may result in improvements in the prevention and therapy of cancer.