AbstractPrevious studies on retinoic acid receptor (RAR) mutants suggested that retinoic acid (RA) is required for loss of interdigital mesenchyme during digit formation. Here, we report that the RA‐generating enzyme retinaldehyde dehydrogenase‐2 (Raldh2) is expressed in the interdigital mesenchyme whereas Cyp26b1, controlling RA degradation, is expressed in digits, limiting autopodal RA action to the interdigital zones. Embryonic day 13.5 Raldh2−/− mouse embryos lose expression of the RARE‐lacZ RA‐reporter transgene and matrix metalloproteinase‐11 (Mmp11) throughout the interdigital mesenchyme, while expression of RARb, Fgf18, and high mobility group N1 (Hmgn1) is lost at the digit–interdigit junction. Raldh2−/− autopods exhibit reduced interdigital apoptosis associated with loss of Bmp7 expression, but Bmp2, Bmp4, Msx2, and Fgf8 were unaffected. Although interdigital expression of Hmgn1 was greatly down‐regulated in Raldh2−/− autopods, complementary expression of Sox9 in digit cartilage was unaffected. Regulation of Hmgn1 and Fgf18 at the digit–interdigit junction suggests RA controls tissue remodeling as well as apoptosis. Developmental Dynamics 239:665–671, 2010. © 2009 Wiley‐Liss, Inc.