Hox genes play important roles in the specification of spatial identity during development of vertebrate embryos. Retinoic acid regulates the transcription of Hox genes in vertebrates. We identified an epidermal enhancer in the 5' flanking region of an ortholog of Hox1 (Ci-Hox1) in the ascidian Ciona intestinalis. This enhancer element drives the transcription of a lacZ reporter gene in the epidermis in the posterior trunk and the anterior tail region of tailbud-stage embryos. Inhibition of retinoic acid synthesis resulted in inactivation of the expression of the reporter gene. The enhancer contains a putative retinoic acid response element. When this element was mutagenized, the expression of the reporter gene disappeared from the epidermis. This sequence was also required for the response to exogenously administered retinoic acid. A heterodimeric nuclear receptor, consisting of the retinoic acid receptor and retinoid X receptor, bound to this sequence. These results indicate that retinoic acid directly activates the epidermal enhancer of Ci-Hox1. This is the first demonstration that retinoic acid is necessary for endogenous gene expression in ascidian embryos.