We show that retinoid receptor antagonists applied to the presumptive wing region block the formation of a zone of polarizing activity (ZPA). This suggests a direct relationship between retinoid signaling and the establishment of the ZPA. We provide evidence that the Hox gene, Hoxb-8, is a direct target of retinoid signaling since exogenously applied RA rapidly induces this gene in the absence of protein synthesis and, moreover, retinoid receptor antagonists down-regulate Hoxb-8 expression. In addition, we find that, in the lateral plate mesoderm, the domains of Hoxb-8 expression and of polarizing activity are coextensive. Taken together, these findings support the hypothesis that retinoids are required for the establishment of a ZPA, and that retinoids act, at least in part, through Hoxb-8, a gene associated with ZPA formation (Charite et al., 1994).