Retinoic acid receptor alpha (RARalpha) is the target of several chromosomal translocations associated with acute promyelocytic leukemias (APLs). These rearrangements fuse RARalpha to different partner genes creating the chimeric proteins: PML-RARalpha, PLZF-RARalpha, and NPM-RARalpha. Although the vast majority of APLs respond to retinoic acid therapy, those associated with PLZF-RARalpha are resistant. We have used retroviruses to express PML-RARalpha, PLZF-RARalpha, NPM-RARalpha, RARalpha403 (a dominant negative mutant of RARalpha), and wild-type RARalpha in murine bone marrow progenitors and found that all of these constructs blocked differentiation and led to the immortalization of myeloid progenitors. This cellular transformation is specific to an alteration of the RARalpha pathway because overexpression of RARbeta, RARgamma, or RXRalpha did not result in similar growth perturbations. Pharmacological doses of RA induced differentiation and inhibited proliferation of cells transformed with either of the APL fusion genes, including PLZF-RARalpha, whereas physiological retinoic acid concentrations were sufficient to reverse the phenotype of cells transformed with wild-type RARalpha. The cellular responses to retinoic acid were accompanied by a sharp decrease in the amount of the RARalpha-fusion proteins expressed in the cells. Our findings suggest that the oncogenicity of RARalpha-fusion proteins results from their nature to behave as unliganded RARalpha in the presence of physiological concentrations of retinoic acid.