The role of retinoic acid (RA) in limb development is unclear, although it has been suggested to be a proximalizing factor which plays a morphogenetic role in pattern formation. Exogenous RA produces a teratogenic effect on limb morphology; similarly, changes in the endogenous distribution of RA following genetic ablation of the RA-metabolizing enzyme, CYP26B1, result in phocomelia accompanied by changes in expression of proximo-distal (P-D) patterning genes, increased cell death, and delayed chondrocyte maturation. Here we show that disruption of RA receptor (RAR) gamma in a Cyp26b1(-/-) background is able to partially rescue limb skeletal morphology without restoring normal expression of proximo-distal patterning genes. We further show that embryos deficient in CYP26B1 exhibit early localized domains of mesenchymal cell death, which are reduced in compound-null animals. This model reveals two genetically separable effects of RA in the limb: an apoptotic effect mediated by RARgamma in the presence of ectopic RA, and a P-D patterning defect which is uncovered following the loss of both CYP26B1 and RARgamma. These data provide genetic evidence to clarify the roles of both RA and CYP26B1 in limb outgrowth and proximo-distal patterning.