Previously we have isolated the monopotential chondrogenic cell line RCJ 3.1 C5.18 from the multipotential mesenchymal cell line RCJ 3.1 [Grigoriadis et al.: Endocrinology, 125:2103-2110, 1989]. When cultured for approximately 20 days under appropriate conditions, these cells from cartilage nodules. In the present investigation, we have used this cell line to study the effects of all-trans retinoic acid (RA) on chondroblast differentiation, cartilage formation, and cartilage degradation. Continuous exposure of cultures to RA (0.01-100 nM) inhibited chondroblast differentiation and glycosaminoglycan (GAG) accumulation in a dose-dependent manner, without comparable effects on cell growth. Pulse treatment with RA for various 4 day periods during a 17-24 day culture period established that RA inhibited differentiation of chondroprogenitors at all periods tested. These effects were reversible, except for part of the effect on early chondroprogenitors. Treatment with RA on days 13-17 in 17 day cultures not only resulted in cessation of cartilage formation, but also in disappearance of pre-existing cartilage nodules. We demonstrated that this was associated with RA-induced downregulation of GAG synthesis and increased degradation of cartilage proteoglycans. Hence, the inhibitory effects of RA on cartilage formation consist of inhibition of chondroblast differentiation, inhibition of GAG synthesis by differentiated chondroblasts, and stimulation of cartilage proteoglycan degradation by differentiated chondroblasts and/or chondrocytes. These results indicate that the clonal monopotential chondrogenic cell line RCJ 3.1 C5.18 forms a good model system to study the effects of retinoids on cartilage differentiation, formation, and degradation.