Retinoic acid (RA) is important for maintaining integrity of alveolar epithelial cells, but the mechanism has not been defined. We cultured type II pneumocytes at confluent, high cell density (10(4) cells/mm(2)) and found that RA (10(-6) M) inhibited thymidine incorporation to 60% of control, despite a dose-dependent increase in epidermal growth factor receptor (EGFR) levels. However, at lower, subconfluent density (10(2) cells/mm(2)), RA stimulated thymidine incorporation to 280% of control. EGF increased thymidine incorporation at concentrations as low as 0.1 ng/mL, but no further increase was observed at higher concentrations up to 100 ng/mL. In subconfluent cells co-treated with EGF (100 ng/mL) and increasing concentrations of RA (10(-8) M-10(-5) M RA), thymidine incorporation was significantly greater at all concentrations than RA alone, with greatest increases observed at 10(-7) (422% of control) and 10(-6) (470% of control) M RA. In summary, the effects of RA on thymidine incorporation are sensitive to changes in cell density. RA inhibits thymidine incorporation at high cell density and stimulates thymidine incorporation at low density. RA increases EGFRs in cultured type II pneumocytes, and EGF stimulates thymidine incorporation independent of the cultured cell density. These data may help to explain how RA mediates lung repair in vivo.