The construction of transgenic FVB/N mice targeting the PMLRARA fusion gene under the control of a human MRP8 promoter recapitulated the phenotype of acute promyelocytic leukemia but had the unexpected result of multiple squamous papillomas of the skin (Brown et al., PROC: Natl. Acad. Sci. USA, 94:2551-2556, 1997). In addition, transgenic MRP8-PMLRARA mice exhibited a skin phenotype characteristic of vitamin A deficiency. The severity of the skin phenotype and spontaneous papilloma development correlated with the level of transgene expression. Papilloma formation was preceded by follicular hyperplasia and the expression of epidermal differentiation markers in the follicular epithelium. Mutations in the Ha or Ki alleles of ras were not detected in papillomas that developed on transgenic skin, and papilloma formation was accentuated on the C57/Bl6 background, unlike the usual resistance of this strain to skin tumor induction. Analysis of liver extracts from transgenic mice indicated a deficiency in the production of retinoic acid. Furthermore, affected transgenic epidermis had reduced levels of retinoic acid receptoralpha (RARalpha) and retinoic X receptor (RXRalpha), and supplementation with exogenous retinoic acid prevented the skin phenotype. When transgenic keratinocytes were grafted to nude mice, the resulting integument was normal, and conversely, when transgenic bone marrow was grafted to normal mice, a skin phenotype did not develop. Together these results suggest that local interruption of PML and RARalpha signaling in the skin, together with a systemic retinoid deficiency, initiates a tumor induction pathway that is independent of ras activation.