Tissue levels of all-trans retinoic acid (RA) are maintained through coordinated regulation of biosynthesis and breakdown. The major pathway for all-trans RA inactivation is initiated by 4-hydroxylation. A novel cytochrome P-450 (CYP26) that catalyzes 4-hydroxylation of all-trans RA has recently been cloned. We have investigated regulation and properties of RA 4-hydroxylase in immortalized human keratinocyte HaCaT cells. In the absence of added retinoid, RA 4-hydroxylase (CYP26) mRNA and protein were minimally detected. Addition of all-trans RA rapidly induced RA 4-hydroxylase mRNA (within 2 h) and activity (within 6 h). Induction of both mRNA and activity was transient, returning to baseline within 48 h, and completely dependent on mRNA synthesis (i.e., blocked by actinomycin D). The synthetic retinoid CD367, which specifically activates nuclear RA receptors, also rapidly induced RA 4-hydroxylase activity. This induction, however, unlike that of all-trans RA, was long-lived (>48 h). This difference was attributable to lack of metabolic inactivation of CD367 in HaCaT cells. CD2665, which inhibits RA receptor-dependent gene transcription, blocked retinoid induction of RA 4-hydroxylase, indicating that it is mediated by RA receptors. Addition of excess unlabeled substrates specific for 10 distinct mammalian P-450 subfamilies did not compete with all-trans RA for RA 4-hydroxylase activity. RA 4-hydroxylase did not hydroxylate 9-cis RA or 13-cis RA. Inhibition of RA 4-hydroxylase activity by ketoconazole potentiated activation of RA receptors by all-trans RA. In summary, RA 4-hydroxylase is a unique, highly specific cytochrome P-450 isoenzyme, whose expression is regulated by its natural substrate, all-trans RA, through activation of RA receptors. RA 4-hydroxylase functions to limit the levels, and thereby the biologic activity of all-trans RA in HaCaT cells.