The biological activity of all-trans retinol, in human keratinocytes, was investigated through metabolic and functional analyses that assessed the capacity for retinol uptake and metabolism and the mechanism of retinol-induced activation of gene transcription. Human keratinocytes converted all-trans retinol predominantly to retinyl esters, which accounted for 60 and 90% of cell-associated radiolabel after a 90-min pulse and a 48-h chase, respectively. Human keratinocytes also metabolized all-trans retinol to low levels of all-trans retinoic acid (11.47-131.3 ng/mg of protein) in a dose-dependent manner, between 0.3 and 10 microM added retinol. Small amounts of 13-cis retinoic acid (5.47-8.62 ng/mg of protein) were detected, but 9-cis retinoic acid was detected only when keratinocytes were incubated with radiolabeled retinol. There was no accumulation of the oxidized catabolic metabolites 4-hydroxy- or 4-oxoretinoic acid; however, 5,6-epoxy retinoic acid was detected at pharmacological levels (10 and 30 microM) of added retinol. Biological activity of retinol was assessed through analysis of two known retinoic acid-mediated responses: 1) reduction of type I epidermal transglutaminase and 2) activation of a retinoic acid receptor-dependent reporter gene, beta RARE3-tk-CAT. Both all-trans retinol and all-trans retinoic acid reduced type I epidermal transglutaminase in a dose-dependent manner; however, the ED50 for all-trans retinol (10 nM) was 10 times greater than for all-trans retinoic acid (1 nM). All-trans retinol also stimulated beta RARE3-tk-CAT reporter gene activity in a dose-dependent manner. Half-maximal induction was observed at 30 nM retinol, which was again 10-fold greater than observed with all-trans retinoic acid. Cotransfection of human keratinocytes with expression vectors for dominant negative mutant retinoic acid and retinoid X receptors reduced retinol-induced beta RARE3-tk-CAT reporter gene activation by 80%. Inhibition of conversion of all-trans retinol or all-trans retinaldehyde to all-trans retinoic acid by citral reduced beta RARE3-tk-CAT activity 98 and 86%, respectively. These data demonstrate that retinol-induced responses in human keratinocytes are mediated by its tightly regulated conversion to retinoic acid, which functions as a ligand to activate nuclear retinoic acid receptors.