This study was designed to investigate the roles of retinoic acid (RA) in transdifferentiation of primary fetal alveolar epithelial type II cells (AECIIs) into alveolar epithelial type I cells (AECIs). Primary fetal AECIIs isolated from rats at a gestational of 19 days were divided into: (i) DMSO group treated using 0.1% DMSO; (ii) RA group, treated with 1 μM RA; and (iii) RA+BMS493 group treated with 1 μM RA and 10-8 M BMS493 (served as a pan-RA receptor antagonist). Then we determined the roles of AQP5 (a specific marker of AECIs), SP-C (a specific marker for AECIIs) and Wnt7b/β- catenin signaling pathway in the transdifferentiation of AECIIs to AECIs. SP-C mRNA and protein expression was significantly down-regulated in AECIIs exposure to RA for 24 h and 48 h, however, significant up-regulation was noticed after exposure for 72 h. AQP5 mRNA and protein expression showed significant increase in RA group, but showed significant decline in the RA+BMS493 group. Wnt7b mRNA, nucleus β-catenin and cyclin D1 were significantly up-regulated in RA group compared with DMSO group. RA may promote fetal AECIIs transdifferentiation into AECIs through activating Wnt7b/β-catenin signaling pathway. Our study contributed to the understanding on the pulmonary regeneration in cases of pulmonary injuries, together with the prevention and treatment of neonatal respiratory distress syndrome.