Cephalic neural crest cells are known to form the frontonasal mesenchyme and contribute to the mesenchyme of the visceral arches. Retinoids affect neural crest cells and their derivatives during development, and thus cause craniofacial, thymus, and conotruncal heart malformations. In addition, retinoids induce malformations of the central nervous system (CNS). Retinoic acid (RA) and its congeners accumulate in a saturable manner in neural crest and neural crest-derived cells, in the hindbrain, and the spinal cord of mouse embryos. Cellular retinoic acid-binding protein (CRABP) was localized by immunohistochemistry in the same areas as were the labelled RA congeners. Thus, CRABP and RA congeners were found in the transitional zone between surface ectoderm and neuropeithelium, from where neural crest cells are known to emanate (day 8 1/2). Later, specific labelling was found in the frontonasal mesenchyme and in the visceral arches. Also in the trunk, neural crest cells were labelled. In CNS, strong staining was seen in the rhombomeres (especially numbers 4-6) of the hindbrain and in the spinal cord. Retinol and cellular retinol-binding protein (CRBP) were more evenly distributed, with exception of surface ectoderm, epithelium of gut, and myocardium, where CRBP was specifically expressed. These findings are discussed in relation to the differential expression of nuclear RA receptors and homeobox genes in the craniofacial region and in the hindbrain. It is possible that RA is important for the normal pattern formation in these regions and acts as a morphogen as previously proposed in limb development.