Retinoic acid (RA) has been proposed to be a direct regulator of HOX gene complexes. However, the molecular mechanism of the RA signaling pathway during normal development is unclear. We have identified an RA-responsive element in the promoter of HOXB1 gene composed of two functionally separable sites: (i) a DR-2 sequence, which is the direct target of the RA receptor retinoid X receptor heterodimer; and (ii) a motif for an RA-inducible and tissue-specific coactivator termed retinoid-inducible protein. Through neither enhancer alone is functional, this combined element strongly activates the HOXB1 promoter in a cell-specific and retinoid-dependent manner. Finally, this activation is potentiated by a proximal autoregulatory site for HOXB1 gene itself. These data define a tripartite cascade leading to the establishment of HOXB1 gene activation.