Differentiating therapy is a new antineoplastic strategy which has received increasing attention due to the remarkable activity of the vitamin A derivative, all-trans retinoic acid (ATRA) in patients with acute promyelocytic leukemia (APL). Although it has been known for years that a variety of agents, including retinoids, could induce leukemic cells to differentiate in vitro, it was not until the initial report from Shanghai in 1988 that laboratory studies translated into clinical activity and benefit in patients. Since this initial report, a number of studies have confirmed that the majority of patients with both newly diagnosed and previously chemotherapy-treated patients with APL achieve complete remission (CR) with ATRA. In addition, the characteristic life-threatening coagulopathy resolves quickly. Several limitations to this approach have emerged, including the development of retinoid resistance, hyperleukocytosis and the retinoic acid syndrome, a constellation of findings including unexplained fever, fluid retention, pleuropericardial effusions and pulmonary infiltrates. Although ATRA is very effective in inducing CR, its benefits compared to conventional chemotherapy are only now being addressed. The first prospective randomized trial comparing ATRA plus chemotherapy to chemotherapy alone was terminated early because of an improved event-free survival for patients receiving ATRA. The benefit was attributable to a difference in relapse rate. A large, intergroup, prospective, randomized trial comparing conventional chemotherapy to ATRA for induction and ATRA to observation for maintenance has recently completed accrual and will provide insight into the emerging role of ATRA in patients with APL. ATRA represents the first example of a specific form of antileukemic therapy targeting a specific genetic abnormality and may serve as a paradigm for the development of differentiating therapy for patients with other hematologic malignancies.