All-trans-retinoic acid (RA) plays a crucial role in survival and differentiation of neurons. For elucidating signaling mechanisms involved in RA-induced neuronal differentiation, we have selected SH-SY5Y cells, which are an established in vitro cell model for studying RA signaling. Here we report that RA-induced neuronal differentiation of SH-SY5Y cells is coupled with increased expression/activation of TGase and in vivo transamidation and activation of RhoA. In addition, RA promotes formation of stress fibers and focal adhesion complexes, and activation of ERK1/2, JNK1, and p38alpha/beta/gamma MAP kinases. Using C-3 exoenzyme (RhoA inhibitor) or monodansylcadaverine (TGase inhibitor), we show that transamidated RhoA regulates cytoskeletal rearrangement and activation of ERK1/2 and p38gamma MAP kinases. Further, by using stable SH-SY5Y cell lines (overexpressing wild-type, C277S mutant, and antisense TGase), we demonstrate that transglutaminase activity is required for activation of RhoA, ERK1/2, JNK1, and p38gamma MAP kinases. Activated MAP kinases differentially regulate RA-induced neurite outgrowth and neuronal marker expression. The results of our studies suggest a novel mechanism of RA signaling, which involves activation of TGase and transamidation of RhoA. RA-induced activation of TGase is proposed to induce multiple signaling pathways that regulate neuronal differentiation.