Retinoic acid (RA) metabolites of vitamin A are key regulators of gene expression involved in embryonic development and maintenance of epithelial tissues. The cellular effects of RA are dependent upon the complement of nuclear receptors expressed (RARs and RXRs), which transduce retinoid signals into transcriptional regulation, the presence of cellular retinoid-binding proteins (CRABP and CRBP), which may be involved in RA metabolism, and the activity of RA metabolizing enzymes. We have been using the zebrafish as a model to study these processes. To identify genes regulated by RA during exogenous RA exposure, we utilized mRNA differential display. We describe the isolation and characterization of a cDNA, P450RAI, encoding a novel member of the cytochrome P450 family. mRNA transcripts for P450RAI are expressed normally during gastrulation, and in a defined pattern in epithelial cells of the regenerating caudal fin in response to exogenous RA. In COS-1 cells transfected with the P450RAI cDNA, all-trans-RA is rapidly metabolized to more polar metabolites. We have identified 4-oxo-RA and 4-OH-RA as major metabolic products of this enzyme. P450RAI represents the first enzymatic component of RA metabolism to be isolated and characterized at the molecular level and provides key insight into regulation of retinoid homeostasis.