Estrogen (E2) has been shown to induce the biosynthesis of retinoic acid (RA) in rat uterus. Here we examined whether E2 could directly induce the enzymes involved in this process by using the ovariectomized rat. A retinol dehydrogenase that we have previously described, eRolDH, and the retinal dehydrogenase, RalDH II, were found to have markedly increased uterine mRNA levels within 4 h of E2 administration, independent of the prior administration of puromycin. eRolDH and RalDH II and their mRNAs were also increased in uteri of rats during estrus. This indicated that RA biosynthesis in rat uterus is directly controlled by E2 and provides a direct link between the action of a steroid hormone and retinoid action. We also examined the cell-specific localization of RalDH II by immunohistochemistry. The enzyme was observed in the stromal compartment, particularly in cells close to the uterine lumenal epithelium. eRolDH was observed only in the lining epithelial cells. Taken together with the previous observations of cellular retinol-binding protein and cellular retinoic acid-binding protein, type two also being expressed in the lumenal epithelium, we propose that RA production is compartmentalized, with retinol oxidation occurring in the lumenal epithelium and subsequent oxidation of retinal to RA occurring in the underlying stromal cells.