Retinoic acid (RA) has complex and pleiotropic functions during vertebrate development. Recent work in several species has increased our understanding of the roles of RA as a signalling molecule. These functions rely on a tight control of RA distribution within embryonic tissues through the combined action of synthesizing and metabolizing enzymes, possibly leading to diffusion gradients. Also important is the switching of nuclear receptors from a transcriptionally repressing state to an activating state. In addition, cross-talk with other key embryonic signals, especially fibroblast growth factors (FGFs) and sonic hedgehog (SHH), is being uncovered. Some of these functions could be maintained throughout the life of an organism to regulate cell-lineage decisions and/or the differentiation of stem cell populations, highlighting possibilities for regenerative medicine.