Lumen formation is a fundamental step in the development of the structural and functional units of glandular organs, such as alveoli and ducts. In an attempt to elucidate the molecular signals that govern this morphogenetic event, we set up an in vitro system in which cloned mammary epithelial cells grown in collagen gels under serum-free conditions form solid, lumen-less colonies. Addition of as little as 0.1% donor calf serum (DCS) was sufficient to induce the formation of a central cavity. Among a number of serum constituents analyzed, retinol was found to mimic the effect of DCS in inducing lumen morphogenesis. Since the biological activities of retinol are largely dependent on its conversion to all-trans-retinoic acid (RA), we examined in more detail the effect of RA on lumen formation. RA induced the formation of lumen-containing colonies (cysts) in a concentration- and time-dependent manner, a half-maximal effect after 9 days of culture being observed with 100 pM RA. The pleiotropic effects of retinoids are mediated by nuclear retinoic acid receptors (RARs; alpha, beta and gamma) and retinoid X receptors (RXRs; alpha, beta and gamma). To identify the signaling pathway involved in RA-induced lumen formation, we used receptor-specific synthetic retinoids. TTNPB, a selective RAR agonist, promoted lumen morphogenesis, whereas RXR-selective ligands lacked this activity. Lumen formation was also induced at picomolar concentrations by Am-580, a synthetic retinoid that selectively binds the RARalpha receptor subtype. Moreover, co-addition of Ro 41-5253, an antagonist of RARalpha, abrogated the lumen-inducing activity of both RA and DCS, indicating that this biological response is mediated through an RARalpha-dependent signaling pathway. To gain insight into the mechanisms underlying RA-induced lumen formation, we assessed the potential role of matrix metalloproteinases (MMP). Using gelatin zymography, we observed a dose-dependent increase in latent and active forms of gelatinase B (MMP-9) upon RA treatment. In addition, lumen formation was abrogated by addition of the synthetic MMP inhibitor BB94, indicating that this morphogenetic process is likely to require MMP activity. Collectively, our results provide evidence that RA promotes lumen formation by mammary epithelial cells in vitro and suggest that it plays a similar role during mammary gland development in vivo.