Retinoic acid (RA) is known to mimic the action of the zone of polarizing activity (ZPA) in inducing the formation of anteroposterior duplicates in the chick limb bud. Although RA had been thought to be a morphogen produced by the ZPA, recently we (Noji et al., 1991) and Wanek et al. (1991) independently concluded that RA induces polarizing activity in cells at the anterior margin of the chick limb bud. In this study, we examined the distribution of RA-induced polarizing activity in the limb bud. At first, RA-containing beads were implanted into various regions of stages 20-23 limb buds. After 24 hr, we grafted tissue fragments from sites adjacent to the RA beads into the anterior margin of host limb buds. High polarizing activity was induced in anterior-distal and apical mesoderm regions immediately under the apical ectodermal ridge (AER) when beads presoaked in 1 mg/ml RA were grafted to anterior sites at stages 19-20. However, in mesoderms distant from the AER, even if adjacent to the implanted RA bead, only low activity was induced. Although implantation of beads soaked in a high concentration (10 mg/ml) of RA did not result in duplications but rather in truncations of the limbs, the apical mesodermal cells in these limbs were converted to ZPA cells, indicating that induction of polarizing activity by RA can occur independently of duplicate formation. The ability to respond to RA treatment was rapidly lost in the cells along the anterior margin of stage 22 limb buds. When the anterior AER was removed, the induction of polarizing activity in the anterior margin of limb buds was markedly reduced. Thus, the AER seems to be necessary for the RA-directed induction of polarizing activity.