Retinoids, particularly all-trans-retinoic acid (RA), are potent regulators of cell differentiation, cell proliferation, and apoptosis. The role of all-trans-RA during development and in the maintenance of adult tissues has been well established. The control of all-trans-RA levels in cells and tissues is regulated by the balance between its biosynthesis and its catabolism to inactive metabolites. The cytochrome P450 enzyme P450RAI (herein renamed P450RAI-1) is partially responsible for this inactivation of all-trans-RA. In this report, we describe the identification, molecular cloning, and characterization of a second related enzyme, P450RAI-2, which is also involved in the specific inactivation of all-trans-RA. Transiently transfected P450RAI-2 can convert all-trans-RA to more polar metabolites including 4-oxo-, 4-OH-, and 18-OH-all-trans-RA. Competition experiments with other retinoids suggest that all-trans-RA is the preferred substrate. The high level of expression of P450RAI-2, particularly in the cerebellum and pons of human adult brain, suggests a unique role for this enzyme in the protection of specific tissues from exposure to retinoids.