The cellular retinoic acid (RA) binding proteins I and II (CRABPI and CRABPII), intracellular proteins which bind retinoic acid with high affinity, are involved in the actions of RA, though their exact roles are not fully understood. We have generated several genetically engineered AB1 cell lines in which both alleles of the CRABPI gene have been deleted by homologous recombination. We have used these CRABPI knockout cell lines to examine the consequences of functional loss of CRABPI on RA-induced gene expression and RA metabolism in the murine embryonic stem cell line, AB1, which undergoes differentiation in response to RA. Complete lack of CRABPI results in decreased intracellular [3H]RA concentrations under conditions in which external concentrations of [3H]RA are low (1-10nM) and in an altered distribution of [3H] polar metabolites of [3H]RA in the cell and in the medium. Fewer [3H] polar metabolites are retained within the CRABPI(-/-) cells compared to the wild-type cells. These data suggest that CRABPI functions to regulate the intracellular concentrations of retinoic acid and to maintain high levels of oxidized retinoic acid metabolites such as 4-oxoretinoic acid within cells.