Retinoic acid (RA) binds to a cytosolic protein distinguishable from the cellular retinol (R) binding protein. Recent studies, showing an influence by R and RA on genomic expression, suggest an interaction with the cell nucleus mediated by the specific binding proteins in a manner resembling that of steroid hormones. RA can irreversibly stimulate in vitro differentiation of teratocarcinoma cells and support early embryonic development in vitamin A depleted animals. This study demonstrates a saturable, highly specific and regional accumulation of RA in the neuroepithelium and developing CNS that occurs in early but not in late fetal development in the mouse. The results suggest that a binding protein, or some other cellular mechanism for accumulation of RA is expressed in the neural cells only during restricted periods of development. High levels are recorded also in regions where cranial neural crest cells are known to migrate, and later in the visceral arches and maxillary areas, the mesenchyme of which is known to be partly derived from migrating cranial neural crest cells. The specific accumulation of RA in embryonic neural and cranial neural crest cells is in line with animal experiments and human clinical data, showing that retinoids specifically impair CNS, eye, ear, and facial development.