The expression of retinoic acid receptor-beta (RAR beta) mRNA is absent or down-regulated in a majority of breast cancers, suggesting that loss of retinoic acid receptor function may be a critical event in breast cancer carcinogenesis. We developed an in vitro system to investigate whether the loss of retinoic acid receptor (RAR) function might affect the proliferation and structural differentiation of normal cultured human mammary epithelial cells (HMECs). Utilizing a truncated retinoic acid receptor (RAR)-alpha construct exhibiting dominant-negative activity against retinoic acid receptor isoforms alpha, beta, and gamma (DNRAR), we inhibited normal retinoic acid receptor function in HMECs. Suppression of RAR function in HMECs resulted in reduced growth inhibition mediated by all-trans-retinoic acid (ATRA). Moreover, the doubling time of HMECs expressing the DNRAR was significantly shortened, associated with a decrease in the percentage of cells in G1 and an increase in the percentage of cells in S-phase relative to controls. In addition, HMECs expressing the DNRAR cultured in prepared extracellular matrix exhibited a loss of extracellular matrix-induced growth arrest and formation of a polarized ductal epthelium. Our results suggest that ATRA and RARs may play an important role in regulating the proliferation of HMECs and in promoting differentiation.