The embryotoxicity and teratogenic potential of etretinate and its main metabolite, etretin, with or without enzymatic drug activation, were investigated in vitro using the rat whole embryo culture system. The metabolizing system used was either a rat liver homogenate (S-9 mix) or esterase (carboxylic-ester hydrolase). Groups of 8–14 rat embryos (explanted on day 9.5 of pregnancy) were cultured for 48 hr with 0, 3, 10, 30 or 100 μg etretinate/ml with or without S-9 mix, or with 0, 0.03, 0.1, 0.3, 1, 3 or 10 μg etretinate/ml in the presence of 0.5 or 1 U esterase/culture flask. Yolk-sac diameters and vascularization and crown-rump and head lengths were unaffected by etretinate treatment alone but somite numbers and morphological scores were reduced at 30 and 100 μg etretinate/ml. The number of embryos with morphological anomalies was increased in the presence of 10 μg etretinate/ml but not significantly so. At higher concentrations the incidence of embryos with anomalies was 100%. Activation of etretinate in the presence of S-9 mix led to increased teratogenic activity of the test compound in vitro, although embryonic crown-rump and head lengths were comparable to control measurements up to the highest concentrations tested. When it was co-incubated with esterase, etretinate became 100 times more active, and its effects occurred in the same concentration range as the embryotoxic effects of etretin added to the culture directly. Without activation etretinate was approximately 100 times less active than etretin in producing general embryotoxicity as well as anomalies in the in vitro culture. The anomalies found after in vitro exposure of rat embryos to etretinate or etretin in this study resembled to a great extent the malformations found in vivo in several species including man. The pattern of anomalies was specific for the compounds used and was similar to that induced by other retinoids. The concentrations of etretin eliciting teratogenic effects in vitro were in the range of etretin peak plasma levels during etretinate therapy in man. Our results indicate that the whole-embryo culture system is a sensitive and valuable model for assessing the embryotoxic and teratogenic potential of retinoids in vitro.