We have utilized retinoic acid receptor γ (gamma) knockout (RARγ(-/-)) embryonic stem (ES) cells as a model system to analyze RARγ mediated transcriptional regulation of stem cell differentiation. Most of the transcripts regulated by all-trans retinoic acid (RA) in ES cells are dependent upon functional RARγ signaling. Notably, many of these RA-RARγ target genes are implicated in retinoid uptake and metabolism. For instance, Lrat (lecithin:retinol acyltransferase), Stra6 (stimulated by retinoic acid 6), Crabp2 (cellular retinoic acid binding protein 2), and Cyp26a1 (cytochrome p450 26a1) transcripts are induced in wild type (WT), but not in RARγ(-/-) cells. Transcripts for the transcription factors Pbx1 (pre-B cell leukemia homeobox-1), Wt1 (Wilm's tumor gene-1), and Meis1 (myeloid ecotropic viral integration site-1) increase upon RA treatment of WT, but not RARγ(-/-) cells. In contrast, Stra8, Dleu7, Leftb, Pitx2, and Cdx1 mRNAs are induced by RA even in the absence of RARγ. Mapping of the epigenetic signature of Meis1 revealed that RA induces a rapid increase in the H3K9/K14ac epigenetic mark at the proximal promoter and at two sites downstream of the transcription start site in WT, but not in RARγ(-/-) cells. Thus, RA-associated increases in H3K9/K14ac epigenetic marks require RARγ and are associated with increased Meis1 transcript levels, whereas H3K4me3 is present at the Meis1 proximal promoter even in the absence of RARγ. In contrast, at the Lrat proximal promoter primarily the H3K4me3 mark, and not the H3K9/K14ac mark, increases in response to RA, independently of the presence of RARγ. Our data show major epigenetic changes associated with addition of the RARγ agonist RA in ES cells.