Throughout the reproductive lifespan of most male mammals, sperm production is constant because of the regulated differentiation of spermatogonia. Retinoic acid (RA) and a downstream target, Stra8, are required for complete spermatogenesis. To examine the role of RA in initiating spermatogonial differentiation, a transgenic mouse model expressing beta-galactosidase under the control of an RA response element was used. Cells in the neonatal testis undergoing active RA signaling were visualized by beta-galactosidase activity, the relationship between RA and differentiation determined, and the role of RA-degrading enzymes in regulating RA demonstrated. Beta-galactosidase activity was found to be predominantly associated with differentiating, premeiotic germ cells and to be distributed nonuniformly throughout the seminiferous tubules. Additionally, beta-galactosidase activity in premeiotic germ cells colocalized with STRA8 protein and was induced in germ cells with exogenous RA treatment. The RA-degrading enzyme, CYP26B1, was found to have germ cell localization and nonuniform distribution between tubules via immunohistochemistry. Treatment with a CYP26 enzyme inhibitor resulted in an increased number of germ cells with both beta-galactosidase activity and STRA8 protein and an increase in the expression of genes associated with differentiation and reduced expression of a gene associated with undifferentiated germ cells. These results show the action of RA in a subset of spermatogonia leads to nonuniform initiation of differentiation throughout the neonatal testis, potentially mediated through the action of CYP26 enzymes. Thus, the presence of RA is a likely driving factor in the initiation of spermatogonial differentiation and may result in asynchronous spermatogenesis.