Acute promyelocytic leukemia (APL) cells express promyelocytic leukemia/retinoic acid receptor alpha (PML/RARalpha) fusion protein, which leads to the blocking of APL cell differentiation. Treatment of APL with all-trans-retinoic acid (ATRA) induces disease remission by in vivo differentiation of APL cells. Differentiation requires cell cycle exit; yet how ATRA couples cell cycle exit to differentiation of APL remains largely unknown. We previously found that ATRA-induced cell differentiation accompanies ubiquitination-proteolysis of ménage à trois 1 (MAT1), an assembly factor and targeting subunit of cyclin-dependent kinase (CDK)-activating kinase (CAK) that regulates G1 exit. We report here that CAK binds to and phosphorylates PML/RARalpha in actively proliferating APL cells. In response to ATRA, PML/RARalpha is dissociated from CAK, leading to MAT1 degradation, G1 arrest, and decreased CAK phosphorylation of PML/RARalpha. CAK phosphorylation of PML/RARalpha is inhibited when MAT1 levels are reduced. Both MAT1 degradation and PML/RARalpha hypophosphorylation occur in ATRA-induced G1-arresting cells undergoing differentiation but not in the synchronized G1 cells that do not differentiate. These findings reveal a novel ATRA signaling on APL cell differentiation, in which ATRA coordinates G1 arrest and transition into differentiation by inducing MAT1 degradation and PML/RARalpha hypophosphorylation through disrupting PML/RARalpha binding and phosphorylation by CAK.