Retinoic acid (RA) is a vitamin A-derived, non-peptidic, small lipophilic molecule that acts as ligand for nuclear RA receptors (RARs), converting them from transcriptional repressors to activators. The distribution and levels of RA in embryonic tissues are tightly controlled by regulated synthesis through the action of specific retinol and retinaldehyde dehydrogenases and by degradation via specific cytochrome P450s (CYP26s). Recent studies indicate that RA action involves an interplay between diffusion (morphogen-like) gradients and the establishment of signalling boundaries due to RA metabolism, thereby allowing RA to finely control the differentiation and patterning of various stem/progenitor cell populations. Here, we provide an overview of the RA biosynthesis, degradation and signalling pathways and review the main functions of this molecule during embryogenesis.