Diabetes increases susceptibility to chronic ulceration. The cause of chronic wound formation in diabetic individuals is multifactorial but may be accelerated by changes in the structure and function of the skin secondary to impaired fibroblast proliferation, decreased collagen synthesis, and increased matrix metalloproteinase (MMP) expression. This study explored cellular and biochemical changes in organ cultures of skin from streptozotocin-diabetic (STZ-D) rats and the effects of all-trans retinoic acid (RA) on these changes. STZ-D rats were killed after 6 weeks. The skin was cut into 2-mm pieces and incubated in organ culture for 3 or 6 days in the absence or presence of 3 micromol/l RA. After organ culture incubation, control and RA-treated tissue was examined histologically after staining with hematoxylin and eosin. In parallel, organ culture-conditioned medium was assayed for MMPs. Additional organ cultures were examined for collagen synthesis using (3)H-proline incorporation into trichloroacetic acid-precipitable material and for glycosaminoglycan production based on interaction with the cationic dye 1,9-dimethylmethylene blue and by staining of tissue sections with periodic acid Schiff reagents. Skin from 6-week STZ-D rats demonstrated features of dermal atrophy including thinning and disorganization of connective tissue bundles and increased space between bundles. The addition of RA resulted in cellular reactivation and partially reversed the histological features of dermal atrophy. Levels of latent and active MMP-9 and MMP-13 were elevated 4- and 10-fold, respectively, in STZ-D skin and reduced by 50-75% (P < 0.05) by RA. Collagen synthesis was increased by 30% (P < 0.05) by RA, whereas glycosaminoglycan expression was increased by only 9% (NS). RA also increased proliferation of STZ-D skin fibroblasts (approximately threefold over control; P < 0.05). Together, these data suggest that RA has the capacity to improve structure and function of diabetic skin.