Acute promyelocytic leukemia (APL) is characterized by an arrest of granulocytic differentiation and a reciprocal t(15;17) translocation fusing the PML gene to the retinoic acid receptor alpha (RAR alpha) gene. PML was recently identified as a potential transcription factor. In non hematopoietic cells, the transfected PML-RAR alpha product binds all trans retinoic acid and exhibits altered transactivating properties when compared with RAR alpha. A major question raised by these observations is whether PML-RAR alpha contributes to the inhibition of myeloid differentiation. We find that in myeloid cell lines responsive to retinoic acid, PML-RAR alpha blocks retinoic acid mediated transactivation and totally abrogates the retinoic acid mediated granulocytic differentiation. These findings strongly suggest that PML-RAR alpha may, by blocking normal retinoic acid dependent myeloid differentiation, participate in the leukemogenesis of APL. The fact that high doses of all-trans retinoic acid relieve the inhibitory effect of PML-RAR alpha corroborates the therapeutic effect of all-trans retinoic acid in APL patients.