Background: We previously reported that all- trans -retinoic acid (RA) treatment can prevent in vitro transformation of immortalized human bronchial epithelial (HBE) cells. Methods: To determine whether methylation inhibits RARβ expression in HBE cells, we used sodium bisulfite sequencing to compare RARβ P2 promoter methylation patterns in RA-sensitive (BEAS-2B) and RA-resistant (BEAS-2B-R1) HBE cells. Immunoblotting was used to assess induction of the RARβ, placental transforming growth factor β (PTGF-β), Fos-related antigen 1 (Fra-1), and transglutaminase II (TGase II) proteins by RA following treatment with azacitidine, a DNA demethylating agent. The expression, transcriptional activity, and growth suppressive activity of RARβ1′, a novel RAR isoform, were evaluated in lung cancer cells transfected with RARβ1′, and expression was also studied in paired normal lung tissues and lung tumors. All statistical tests were two-sided. Results: Hypermethylation was observed in the 3′ region of the RARβ P2 promoter of BEAS-2B-R1 but not BEAS-2B cells. Azacitidine treatment of BEAS-2B-R1 cells restored RA-inducible RARβ2 and PTGF-β expression but not that of RARβ1′, Fra-1, or TGase II. RARβ1′ expression was repressed in RA-resistant BEAS-2B-R1 cells and in lung cancers, compared with adjacent normal lung tissues. BEAS-2B-R1 cells transiently transfected with RARβ1′ had increased RA-dependent activation of a retinoic acid receptor element (RARE)–containing reporter plasmid compared with vector control (mean = 3.2, 95% confidence interval [CI] = 3.1 to 3.3 versus mean = 1.4, 95% CI = 1.3 to 1.5; P <.001). In H358 lung cancer cells transiently transfected with RARβ1′, RA treatment restored target gene expression compared with that in vector-transfected cells and suppressed cell growth compared with that in untreated cells (4 μ M ; treated mean = 0.49 versus untreated mean = 1.0, difference = 0.51, 95% CI = 0.35 to 0.67, P = .003; 8 μ M : treated mean = 0.50 versus untreated mean = 1.0, difference = 0.50, 95% CI = 0.26 to 0.74, P = .015). Conclusion: Restoration of RARβ1′ expression may overcome retinoid resistance in lung carcinogenesis.