The CCAAT/enhancer binding protein epsilon (C/EBPepsilon) is a nuclear transcription factor expressed predominantly in myeloid cells and implicated as a potential regulator of myeloid differentiation. We show that it was rapidly induced in the acute promyelocytic leukemia (APL) cell line NB4 during granulocytic differentiation after exposure to retinoic acid (RA). Our data suggest that induction of C/EBPepsilon expression was through the retinoic acid receptor alpha (RARalpha) pathway. Reporter gene studies showed that C/EBPepsilon promoter/enhancer activity increased in a retinoid-dependent fashion via the retinoic acid response element (RARE) present in the promoter region of C/EBPepsilon. The RA-induced expression of C/EBPepsilon markedly increased in U937 myelomonoblasts that were induced to express promyelocytic leukemia/RARalpha (PML/RARalpha), but not in those induced to express promyelocytic leukemia zinc finger/RARalpha (PLZF/RARalpha). In retinoid-resistant APL cell lines, C/EBPepsilon either is not induced or is induced only at very high concentrations of RA (>/=10(-6) M). In addition, forced expression of C/EBPepsilon in the U937 myelomonoblastic leukemia cells mimicked terminal granulocytic differentiation, including morphologic changes, increased CD11b/CD66b expression, and induction of secondary granule protein expression. Our data strongly suggest that C/EBPepsilon is a downstream target gene responsible for RA-induced granulocytic differentiation of APL cells.