Limb morphogenesis is a complex phenomenon in which retinoids play an important role. Abnormal maternal retinoid levels from high oral doses cause fetal malformations, including abnormalities of the musculoskeletal system. Our purpose was to identify the retinoid-responsive cells in bone and cartilage during limb development by using a transgenic line of mice containing a reporter gene insert consisting of a retinoic acid response element linked to an Escherichia coli beta-galactosidase gene. Transgenic fetuses from day 11.5 after conception to birth (day 20) were analyzed histologically. Retinoid-responsive cells and tissues were first seen in the limb bud at 12.5 days in the webs between the forming digits. The webs stained maximally at 14.5 days, after which staining intensity subsided. Staining in the muscles was detectable at 13.5 days, at a stage coinciding with myoblast fusion. Specific regions of perichondrium and periosteum also stained at this stage. Occasional staining was observed in individual chondroblasts in all chondrogenic regions, including hypertrophic chondroblasts and certain articular surfaces of developing joints. Staining of these tissues decreased in intensity in subsequent stages. Osteoclasts started to express beta-galactosidase at 15.5 days and continued to stain into maturity. Our results indicate that specific subsets of cells respond to retinoids at specific stages in the course of normal limb development. In hypertrophic chondrocytes and cells in the webs and joints that display such a response, retinoid-induced effects may be linked to cell death that occurs in these regions. Staining in muscle, perichondrium, and periosteum may reflect retinoid-induced effects associated with cell differentiation and growth. These results suggest that retinoids play a role in a variety of tissues, including bone and cartilage, at specific stages during morphogenesis.