The synthetic retinoid, N- (4-hydroxyphenyl) retinamide (4-MPR) (Fenretinide), is a cancer chemopreventive and antiproliferative agent whose mechanism of action is unknown. 4-HPR alone is a poor inducer of differentiation of HL60 cells compared to all-trans-retinoic acid (RA) . Here, we found that combinations of 4-MPR and RA synergistically induced differentiation of HL6O cells. In addition, 4-HPR increased the level of retinoylation, the covalent binding of RA to proteins. Retinoylation occurs in many eukaryotic cell lines and may be involved in RA-induced differentiation. These results suggest that 4-HPR may be a member of a class of retinoids that are active because they displace RA from extracellular and intracellular sites or because they inhibit RA catabolism. Based on these proposed mechanisms, retinoids which do not cause differentiation as sole agents may have utility in the clinic in combination with RA.