We observed that all-trans retinoic acid (ATRA) inhibited the growth of MCF-7 breast cancer cells, but not those transfected with HER2/NEU or its transactivating ligand HEREGULIN. This suggests that Her2/neu causes breast cancer cells to be resistant to the growth inhibitory effects of ATRA. To confirm this observation, MDA-MB-453 and BT-474 cells, which have high levels of Her2/neu and are resistant to ATRA, were incubated with the trastuzumab (Herceptin) antibody so that we could determine whether inhibition of the expression and function of Her2/neu would resensitize these cells to ATRA. Indeed, we found that MDA-MB-453 and BT-474 cells treated with trastuzumab were growth inhibitory by ATRA. We then determined whether Her2/neu uses Grb2 and Akt proteins to induce ATRA resistance. Liposome-incorporated Grb2 antisense oligonucleotides (L-Grb2) and a dominant negative (DN) AKT mutant were used to down-regulate Grb2 expression and inhibit Akt activity, respectively. When incubated with L-Grb2 or transfected with the DN AKT mutant, ATRA-resistant, Her2/neu-overexpressing cells became sensitive to ATRA. Our results indicate that Her2/neu utilizes Grb2 and Akt proteins to induce ATRA resistance in breast cancer cells. ATRA sensitivity was also correlated with RARalpha protein levels since higher RARalpha protein levels were observed in cells in which the Her2/neu pathway was inhibited.