The great success of all-trans-retinoic acid (ATRA) in the treatment of acute promyelocytic leukemia (APL) revolutionized the treatment of the disease and introduced the concept of differentiation therapy. ATRA, a physiologic derivative of vitamin A (retinol), induces complete clinical remissions (CR) in majority of patients with APL, M3 type of acute myeloid leukemia (AML). In contrast to the cytotoxic chemotherapeutics, ATRA can selectively induce terminal differentiation and apoptosis of leukemic cells without causing bone marrow hypoplasia or exacerbation of the frequently occurring fatal hemorrhagic syndromes in patients with APL. Despite the high remission rates of up to 90% with oral ATRA alone, these remissions are transient and seldom durable. Chronic daily oral administration of ATRA results in accelerated metabolism of ATRA, leading to a progressive decline in plasma drug concentrations. These lower drug levels are associated with relapses and resistance to oral ATRA. Thus oral ATRA has to be combined with cytotoxic chemotherapy. However, liposomal ATRA (L-ATRA) "monotherapy" induces long term (up to five years) molecular remissions (negative-PCR for PML-RARα) in about 40% of the newly diagnosed APL patients. This review discusses current basic, clinical knowledge and clinical experience with APL patients treated with L-ATRA and the possible impact of L-ATRA on the outcome of APL.