Retinoic Acid (RA) treatment induces disease remission of Acute Promyelocytic Leukaemia (APL) patients by triggering terminal differentiation of neoplastic cells. RA-sensitivity in APL is mediated by its oncogenic protein, which results from the recombination of the PML and the RA receptor alpha (RAR alpha) genes (PML/RAR alpha fusion protein). Ectopic expression of PML/RAR alpha into haemopoietic cell lines results in increased response to RA-induced differentiation. By structure-function analysis of PML/RAR alpha-mediated RA-differentiation, we demonstrated that fusion of PML and RAR alpha sequences and integrity of the PML dimerization domain and of the RAR alpha DNA binding region are required for the effect of PML/RAR alpha on RA-differentiation. Indeed, direct fusion of the PML dimerization domain to the N- or C-terminal extremities of RAR alpha retained full biological activity. All the biologically active PML/RAR alpha mutants formed high molecular weight complexes in vivo. Functional analysis of mutations within the PML dimerization domain revealed that the capacity to form PML/RAR alpha homodimers, but not PML/RAR alpha-PML heterodimers, correlated with the RA-response. These results suggest that targeting of RAR alpha sequences by the PML dimerization domain and formation of nuclear PML/RAR alpha homodimeric complexes are crucial for the ability of PML/RAR alpha to mediate RA-response.