RETINOIC acid had been implicated as a natural morphogen in chicken and frog embryogenesis, and is presumed to act through the gene regulatory activity of a family of nuclear receptors. Homeobox genes, which specify positional information in Drosophila and possibly in vertebrate embryogenesis, are among the candidate responsive genes. We previously reported that retinoic acid specifically induces human homeobox gene (HOX) expression in the embryonal carcinoma cell line NT2/D1. We now show that the nine genes of the HOX2 cluster are differentially activated in NT2/D1 cells exposed to retinoic acid concentrations ranging from 10(-8) to 10(-5) M. Genes located in the 3' half of the cluster are induced at peak levels by 10(-8) M retinoic acid, whereas a concentration of 10(-6) to 10(-5) M is required to fully activate 5' genes. At both high and low retinoic acid concentrations, HOX2 genes are sequentially activated in embryonal carcinoma cells in the 3' to 5' direction.