Retinoic acid (RA) signalling is essential for epidermal differentiation; however, the mechanisms by which it acts are largely unexplored. Partitioning of RA between different nuclear receptors is regulated by RA-binding proteins. We show that cellular RA-binding proteins CRABP1 and CRABP2 and the fatty acid-binding protein FABP5 are dynamically expressed during skin development and in adult tissue. CRABP1 is expressed in embryonic dermis and in the stroma of skin tumours, but confined to the hair follicle dermal papilla in normal postnatal skin. CRABP2 and FABP5 are expressed in the differentiating cells of sebaceous gland, interfollicular epidermis and hair follicles, with FABP5 being a prominent marker of sebaceous glands and anagen follicle bulbs. All three proteins are upregulated in response to RA treatment or Notch activation and are negatively regulated by Wnt/beta-catenin signalling. Ectopic follicles induced by beta-catenin arise from areas of the sebaceous gland that have lost CRABP2 and FABP5; conversely, inhibition of hair follicle formation by N-terminally truncated Lef1 results in upregulation of CRABP2 and FABP5. Our findings demonstrate that there is dynamic regulation of RA signalling in different regions of the skin and provide evidence for interactions between the RA, beta-catenin and Notch pathways.