In this paper we describe experiments that detail the response of murine Hox-2 genes to cellular differentiation and retinoic acid in cell culture. Hox-2 genes are transiently activated in differentiating ES cells even in the absence of retinoic acid (RA), indicating that their induction is a normal aspect of differentiation. Furthermore, in the continuous presence of RA F9 teratocarcinoma cells show a differential ability to maintain Hox-2 expression depending upon whether the cells follow a visceral or parietal endoderm pathway. These data suggest a clear dependence of Hox-2 expression on the degree and type of differentiation in different cells. However, RA also has dramatic differentiation independent effects on Hox-2 regulation. In ES cells the levels of Hox expression are greatly enhanced by exposure to RA, and in F9 cells of the visceral or parietal phenotype the continuous presence of RA is required to maintain these high levels. Nuclear run-on experiments illustrate that Hox-2 genes are active in F9 stem cells and that a large portion of the RA induction is mediated by post-transcriptional mechanisms. Therefore RA exerts its effects on Hox-2 expression by upregulating or modulating genes which are already active, rather than by turning-on silent genes. All nine Hox-2 genes are induced in F9 cells by RA and there is a direct correlation (collinearity) between gene order and the relative dose response of each gene to RA. In Xenopus embryos treated with RA, homologues of the Hox-2 genes also displayed a temporal and dose response collinearity with gene organisation. Together these findings suggest that the collinear response to RA is highly conserved in vertebrates and combined with the ability of RA to modify expression during cellular differentiation could be an important feature of the Hox-2 cluster itself used to generate the spatially-restricted patterns of gene expression in embryogenesis.