All-trans retinoic acid (atRA), a metabolite of vitamin A, is essential for embryonic development. Thus the spatial and temporal dispersal of RA must be tightly controlled. Previous studies show that excessive atRA led to growth inhibition and p21 accumulation in mouse embryonic palatal mesenchymal (MEPM) cells. We reported here the identification of p21 as a required mediator during atRA-induced growth inhibition. atRA caused a G1 arrest in the cell cycle with an increase in the proportion of cells in G0/G1 and a decrease in the proportion of cells in S phase. In addition to a marked effect on cell cycling, atRA also triggered DNA fragmentation, reflected by an increase of the fraction of cells in the sub-G(1) population. Western blot analysis revealed that atRA treatment led to an increase in p21 level and a decrease in cyclin D1 protein and Rb phosphorylation. Using luciferase assay with reporter gene regulated by p21 promoter, we showed that atRA increased the reporter activity in a dose-dependent manner; and p21 siRNA blocked the growth inhibition by atRA, suggesting that p21 is required for atRA-mediated growth inhibition. Moreover, the induction of p21 by atRA was partially attenuated when RAR was silenced with specific siRNA. atRA stimulated RARE-driven reporter gene activity dose-dependently. Using chromatin immunoprecipitation, we demonstrated that RAR protein could bind to the p21 promoter. Taken together, our results indicate p21 is responsible for atRA-induced growth inhibition of MEPM cells and RAR plays a role during this process.