The ability of retinoids to induce growth inhibition associated with differentiation of diverse cell types makes them potent anti-cancer agents. We examined the effect of retinoic acid (RA) in cell lines derived from rhabdomyosarcoma (RMS), a malignant soft-tissue tumor committed to the myogenic lineage, but arrested prior to terminal differentiation. We showed that several RMS derived cell lines, including RD human rhabdomyosarcoma cells, are resistant to the growth-inhibitory and differentiation effects of RA. We established that this RA-resistance correlates with reduced expression and activity of RA-receptors in RD cells. We stably expressed either RARalpha, RARbeta, RARgamma, or RXRalpha expression vector into RD cells and found that only RARbeta or RARgamma induced a significant RA growth arrest without promoting differentiation indicating that changes in the amounts of RARs and RXRs are not sufficient to determine the RA myogenic response of rhabdomyosarcoma cells. Activation of RD cell differentiation by ectopic MRF4 expression enhanced RA-receptor activity and led to RA induction of differentiation. These studies demonstrate that RA-resistance of RD cells is linked to their lack of differentiation and suggest that the differentiation-promoting activity of RA requires factors other than RAR-RXR heterodimers.