We previously reported that all-trans-retinoic acid (RA) treatment can prevent in vitro transformation of immortalized human bronchial epithelial (HBE) cells.To determine whether methylation inhibits RARbeta expression in HBE cells, we used sodium bisulfite sequencing to compare RARbeta P2 promoter methylation patterns in RA-sensitive (BEAS-2B) and RA-resistant (BEAS-2B-R1) HBE cells. Immunoblotting was used to assess induction of the RARbeta, placental transforming growth factor beta (PTGF-beta), Fos-related antigen 1 (Fra-1), and transglutaminase II (TGase II) proteins by RA following treatment with azacitidine, a DNA demethylating agent. The expression, transcriptional activity, and growth suppressive activity of RARbeta1', a novel RAR isoform, were evaluated in lung cancer cells transfected with RARbeta1', and expression was also studied in paired normal lung tissues and lung tumors. All statistical tests were two-sided.Hypermethylation was observed in the 3' region of the RARbeta P2 promoter of BEAS-2B-R1 but not BEAS-2B cells. Azacitidine treatment of BEAS-2B-R1 cells restored RA-inducible RARbeta2 and PTGF-beta expression but not that of RARbeta1', Fra-1, or TGase II. RARbeta1' expression was repressed in RA-resistant BEAS-2B-R1 cells and in lung cancers, compared with adjacent normal lung tissues. BEAS-2B-R1 cells transiently transfected with RARbeta1' had increased RA-dependent activation of a retinoic acid receptor element (RARE)-containing reporter plasmid compared with vector control (mean = 3.2, 95% confidence interval [CI] = 3.1 to 3.3 versus mean = 1.4, 95% CI = 1.3 to 1.5; P<.001). In H358 lung cancer cells transiently transfected with RARbeta1', RA treatment restored target gene expression compared with that in vector-transfected cells and suppressed cell growth compared with that in untreated cells (4 microM; treated mean = 0.49 versus untreated mean = 1.0, difference = 0.51, 95% CI = 0.35 to 0.67, P = .003; 8 microM: treated mean = 0.50 versus untreated mean = 1.0, difference = 0.50, 95% CI = 0.26 to 0.74, P = .015).Restoration of RARbeta1' expression may overcome retinoid resistance in lung carcinogenesis.