In mammals, including rats and mice, the development of pulmonary alveolar septa is primarily limited to late gestation and the early periods of postnatal life. Before this time, the rat lung contains a relatively large supply of endogenous retinyl ester that, together with its metabolite retinoic acid, has been shown to increase elastin gene expression and the number of alveoli. We have hypothesized that mice bearing a deletion of one or more genes encoding for retinoic acid receptors (which are DNA binding proteins that alter transcription of retinoic acid-responsive genes) may demonstrate abnormalities in retinoid-mediated alveolar formation. Our studies demonstrate that the absence of the retinoic acid receptor-gamma (RARgamma) is associated with a decrease in the steady-state level of tropoelastin messenger RNA in a subpopulation of lung fibroblasts at Postnatal Day 12. RARgamma gene deletion also resulted in a decrease in whole lung elastic tissue and alveolar number, and an increase in mean cord length of alveoli (L(m)) at Postnatal Day 28. The additional deletion of one retinoid X receptor (RXR)alpha allele resulted in a decrease in alveolar surface area and alveolar number, and an increase in L (m). These data indicate that RARgamma is required for the formation of normal alveoli and alveolar elastic fibers in the mouse, and that RAR/RXR heterodimers are involved in alveolar morphogenesis.