Understanding the pathways that are targeted by cancer drugs is instrumental for their rational use in a clinical setting. Inhibitors of histone deacetylases (HDACI) selectively inhibit proliferation of malignant cells and are used for the treatment of cancer, but their cancer selectivity is understood poorly. We conducted a functional genetic screen to address the mechanism(s) of action of HDACI. We report here that ectopic expression of two genes that act on retinoic acid (RA) signaling can cause resistance to growth arrest and apoptosis induced by HDACI of different chemical classes: the retinoic acid receptor alpha (RARalpha) and preferentially expressed antigen of melanoma (PRAME), a repressor of RA signaling. Treatment of cells with HDACI induced RA signaling, which was inhibited by RARalpha or PRAME expression. Conversely, RAR-deficient cells and PRAME-knockdown cells show enhanced sensitivity to HDACI in vitro and in mouse xenograft models. Finally, a combination of RA and HDACI acted synergistically to activate RA signaling and inhibit tumor growth. These experiments identify the RA pathway as a rate-limiting target of HDACI and suggest strategies to enhance the therapeutic efficacy of HDACI.