In McA-RH 8994 rat hepatoma cells, all-transretinoic acid (t-RA) induces expression of the α-fetoprotein (AFP) and albumin genes and results in a phenotype similar to differentiated fetal hepatocytes. The present study elucidated the mechanism involved in AFP gene regulation mediated by retinoic acid. Northern blot analyses demonstrated that 9-cis-retinoic acid (c-RA), a ligand for retinoid x receptors (RXRs), also induced expression of the AFP gene in McA-RH 8994 cells. The induction was time- and dose-dependent. Northern blots and transfection assays using the 7·3 kb full-length regulatory region of the AFP gene demonstrated that c-RA was more effective than t-RA in regulating expression of the AFP gene. At 10−7 m, c-RA increased AFP mRNA 5-fold and chloramphenicol acetyltransferase (CAT) activity 2·5-fold. In contrast, t-RA at a concentration of 10−7 m exerted no significant effect; 10− 6 to 10−5 m t-RA was needed to affect AFP gene expression. These data suggested that activation of RXRs is essential for the regulation of the AFP gene. Co-transfection experiments revealed that overexpression of RXRα in McA-RH 8994 cells further enhanced the CAT activity induced by c-RA. In addition, c-RA did not alter the half-life of AFP mRNA. Thus, RXRα may play a crucial role in transcriptional regulation of the AFP gene and in controlling hepatocyte phenotype.