Screening of a total of 86 crude drugs for retinoid X receptor (RXR) ligands demonstrated that the methanol extract of the bark of Magnolia obovata markedly activated the transcriptional activity of RXRalpha in luciferase reporter assays. Thereafter, honokiol (1) was isolated as a constituent able to activate RXR selectively as a natural rexinoid, but not RARalpha. The activity of 1 was more potent than those of phytanic acid and docosahexaenoic acid, both of which are known to be natural RXR agonists. Honokiol (1) is capable of activating a RXR/LXR heterodimer, resulting in the induction of ATP-binding cassette transporter A1 mRNA and protein expression in RAW264.7 cells, as well as an increase in [(3)H]cholesterol efflux from peritoneal macrophages. These effects of 1 were enhanced synergistically in the presence of an LXR agonist, 22(R)-hydroxycholesterol. The results obtained demonstrate that 1, a newly identified natural rexinoid, regulates the functions of RXR/LXR heterodimer and abrogates foam cell formation by the induction of ABCA1 via activation of the RXR/LXR heterodimer.