Several embryonal carcinoma (EC) cell lines were tested in culture for their ability to metabolize all-trans-[3H]retinol, all-trans-[3H]retinyl acetate, and all-trans-[3H]retinoic acid. There was little, if any, metabolism of all-trans-retinol to more polar compounds; we failed to detect conversion to acidic retinoids by reverse-phase high performance liquid chromatography and derivatization. We also did not observe [3H]retinoic acid when EC cells were incubated with [3H]retinyl acetate. Unlike the other retinoids, all-trans-[3H]retinoic acid, even at micromolar levels, was almost totally modified by cells from several EC lines within 24 h. Most of the labeled products were secreted into the medium. Some EC lines metabolized retinoic acid constitutively, whereas others had an inducible enzyme system. A differentiation-defective line, which contains little or no cellular retinoic acid-binding protein activity, metabolized retinoic acid poorly, even after exposure to inducers. At least eight retinoic acid metabolites were generated; many contain hydroxyl residues. Our data lead us to propose that retinol does not induce differentiation of EC cells in vitro via conversion to retinoic acid. Also, the relatively rapid metabolism of retinoic acid by EC cells suggests either that the induction of differentiation need involve only a transient exposure to this retinoid or that one or more of the retinoic acid metabolites can also promote differentiation.