All-trans retinoic acid, a metabolite of retinol, is a possible morphogen in vertebrate development. Two classes of cellular proteins, which specifically bind all-trans retinoic acid, are thought to mediate its action: the nuclear retinoic acid receptors (RAR alpha, beta, gamma), and the cytoplasmic binding proteins known as cellular retinoic acid-binding proteins I and II (CRABP I and II). The function of the retinoic acid receptors is to regulate gene transcription by binding to DNA in conjunction with the nuclear retinoid X receptors (RXR alpha, beta, gamma), which in turn have 9-cis retinoic acid as a ligand. Several lines of evidence suggest that the role of the cellular retinoic acid-binding proteins is to control the concentration of free retinoic acid reaching the nucleus in a given cell. Here, we have addressed the role of the cellular retinoic acid-binding protein I in development by ectopically expressing it in the mouse lens, under the control of the alpha A-crystallin promoter. We show that this ectopic expression interferes with the development of the lens and with the differentiation of the secondary lens fiber cells, causing cataract formation. These results suggest that correct regulation of intracellular retinoic acid concentration is required for normal eye development. In addition, the generated transgenic mice also present expression of the transgene in the pancreas and develop pancreatic carcinomas, suggesting that overexpression of the cellular retinoic acid-binding protein is the cause of the tumors. These results taken together provide evidence for a role of the cellular retinoic acid-binding protein in development and cell differentiation. The relevance of these findings to the possible role of the cellular retinoic acid-binding proteins in the transduction of the retinoic acid signal is discussed.