Retinoic acid, a hormonally active form of vitamin A, is produced in vivo in a two step process: retinol is oxidized to retinal and retinal is oxidized to retinoic acid. Retinal dehydrogenase type II (RalDH2) catalyzes this last step in the production of retinoic acid in the early embryo, possibly producing this putative morphogen to initiate pattern formation. The enzyme is also found in the adult animal, where it is expressed in the testis, lung, and brain among other tissues. The crystal structure of retinal dehydrogenase type II cocrystallized with nicotinamide adenine dinucleotide (NAD) has been determined at 2.7 A resolution. The structure was solved by molecular replacement using the crystal structure of a mitochondrial aldehyde dehydrogenase (ALDH2) as a model. Unlike what has been described for the structures of two aldehyde dehydrogenases involved in the metabolism of acetaldehyde, the substrate access channel is not a preformed cavity into which acetaldehyde can readily diffuse. Retinal dehydrogenase appears to utilize a disordered loop in the substrate access channel to discriminate between retinaldehyde and short-chain aldehydes.