Two cooperating retinoic acid response elements (RAREs) in the cellular retinoic acid-binding protein II (CRABPII) gene mediate differential transcriptional transactivation by retinoic acid receptors (RARs) and retinoid X receptors (RXRs) in P19 embryonal carcinoma cells. RARE1 and RARE2 are direct repeats (DR) of two motifs separated by 2 bp (DR2) and 1 bp (DR1), respectively, and bind RAR-RXR heterodimers more efficiently than homodimers. Using all-trans and 9-cis RA, which differentially activate RARs and RXRs, and RAR and RXR dominant-negative mutants, RAR-RXR heterodimers bound to RARE1 and RARE2 are shown to be responsible for CRABPII promoter transactivation, arguing against a unique DR spacing specifying recognition by RARs. Within heterodimers, RAR and RXR independently and differentially transactivate, depending on the specific RARE. Consistent with these results, 9-cis RA increases CRABPII mRNA levels more efficiently than all-trans RA. In contrast, all-trans and 9-cis RA have identical effects on induction of RAR beta 2 transcripts.