The role of the cellular retinoic acid binding protein type II (CRABPII) in the retinoic acid (RA) signaling pathway is poorly understood. Northern blot analysis of 12 breast cell lines showed that CRABPII mRNA content correlated with growth inhibition by RA, suggesting that this binding protein enhances cellular response to RA. Ectopic CRABPII expression supported dose-dependent growth inhibition by RA in SC115-resistant but not MDA-MB-231-resistant cells, indicating that CRABPII is sufficient to rescue RA antiproliferation in a permissive background. In both cell lines, ectopic binding protein enhanced gene activation by RA. Thus, induction of tissue transglutaminase by all-trans-RA and, surprisingly, 9-cis-RA was enhanced 5-fold over and above the level of induction in control cells (SC115), and activation of a RA response element reporter was enhanced 3-fold (MDA-MB-231). A 5-fold enhancement of RA induction of RA receptor beta expression as a result of ectopic binding protein expression was also demonstrated (SC115). These findings indicate that CRABPII is a positive regulator of RA signaling in breast cells.