In poeciliid fish the male anal fin has been transformed into a gonopodium, an intromittent organ required for internal fertilization. Elevated testosterone levels induce metamorphosis of a subset of anal fin rays to grow and form the specialized terminal structures of the gonopodium. The molecular mechanisms underlying these processes are largely unknown. Here, we investigated whether retinoic acid (RA) signaling is involved in gonopodium development in the swordtail Xiphophorus hellerii. We showed that aldh1a2, a RA synthesizing enzyme, and the RA receptors, rar-ga and rar-gb, are expressed in anal fins during metamorphosis. aldh1a2 expression is regulated by testosterone in a concentration-dependent manner and is up-regulated in both hormone-induced and naturally developing gonopodia. Androgen receptor (ar), a putative regulator of gonopodial development, is co-expressed with aldh1a2 and the RA receptors in gonopodial rays. Importantly, experimental increase of RA signaling promoted growth of the gonopodium and increased the number of new segments. Based on gene expression analyses and pharmacological manipulation of gonopodium development, we show that the RA signaling pathway is activated in response to androgen signaling and promotes fin ray growth and development during the metamorphosis of the anal fin into the gonopodium.