Retinoids regulate gene transcription through activating retinoic acid receptors (RARs)/retinoic X receptors (RXRs). Of the three RAR receptors (alpha, beta, and gamma), RARbeta has been considered a tumor suppressor gene. Here, we identified a novel RARbeta isoform-RARbeta5 in breast epithelial cells, which could play a negative role in RARbeta signaling. Similar to RARbeta2, the first exon (59 bp) of RARbeta5 is RARbeta5 isoform specific, whereas the other exons are common to all of the RARbeta isoforms. The first exon of RARbeta5 does not contain any translation start codon, and therefore its protein translation begins at an internal methionine codon of RARbeta2, lacking the A, B, and part of C domain of RARbeta2. RARbeta5 protein was preferentially expressed in estrogen receptor-negative breast cancer cells and normal breast epithelial cells that are relatively resistant to retinoids, whereas estrogen receptor-positive cells that did not express detectable RARbeta5 protein were sensitive to retinoid treatment, suggesting that this isoform may affect the cellular response to retinoids. RARbeta5 isoform is unique among all of the RARs, because a corresponding isoform was not detectable for either RARalpha or RARgamma. RARbeta5 mRNA was variably expressed in normal and cancerous breast epithelial cells. Its transcription was under the control of a distinct promoter P3, which can be activated by all-trans-retinoic acid (atRA) and other RAR/RXR selective retinoids in MCF-7 and T47D breast cancer cells. We mapped the RARbeta5 promoter and found a region -302/-99 to be the target region of atRA. In conclusion, we identified and initially characterized RARbeta5 in normal, premalignant, and malignant breast epithelial cells. RARbeta5 may serve as a potential target of retinoids in prevention and therapy studies.