Retinoids (RA) have been used as therapeutic agents for numerous skin diseases, from psoriasis to acne and wrinkles. While RA is known to inhibit keratinocyte differentiation, the molecular effects of RA in epidermis have not been comprehensively defined. To identify the transcriptional targets of RA in primary human epidermal keratinocytes, we compared the transcriptional profiles of cells grown in the presence or absence of all-trans retinoic acid for 1, 4, 24, 48, and 72 h, using large DNA microarrays. As expected, RA suppresses the protein markers of cornification; however the genes responsible for biosynthesis of epidermal lipids, long-chain fatty acids, cholesterol, and sphingolipids, are also suppressed. Importantly, the pathways of RA synthesis, esterification and metabolism are activated by RA; therefore, RA regulates its own bioavailability. Unexpectedly, RA regulates many genes associated with the cell cycle and programmed cell death. This led us to reveal novel effects of RA on keratinocyte proliferation and apoptosis. The response to RA is very fast 315 genes were regulated already after 1 h. More than one-third of RA-regulated genes function in signal transduction and regulation of transcription. Using in silico analysis, we identified a set of over-represented transcription factor binding sites in the RA-regulated genes. Many psoriasis-related genes are regulated by RA, some induced, others suppressed. These results comprehensively document the transcriptional changes caused by RA in keratinocytes, add new insights into the molecular mechanism influenced by RA in the epidermis and demonstrate the hypothesis-generating power of DNA microarray analysis.