It is unknown how dendritic cells (DCs) become specialized as mucosal DCs and maintain intestinal homeostasis. We report that a subset of bone marrow cells freshly isolated from C57BL/6 mice express the retinoic acid (RA)-synthesizing enzyme aldehyde dehydrogenase family 1, subfamily A2 (ALDH1a2) and are capable of providing RA to DC precursors in the bone marrow microenvironment. RA induced bone marrow-derived DCs to express CCR9 and ALDH1a2 and conferred upon them mucosal DC functions, including induction of Foxp3+ regulatory T cells, IgA-secreting B cells, and gut-homing molecules. This response of DCs to RA was dependent on a narrow time window and stringent dose effect. RA promoted bone marrow-derived DC production of bioactive TGF-β by inhibiting suppressor of cytokine signaling 3 expression and thereby enhancing STAT3 activation. These RA effects were evident in vivo, in that mucosal DCs from vitamin A-deficient mice had reduced mucosal DC function, namely failure to induce Foxp3+ regulatory T cells. Furthermore, MyD88 signaling enhanced RA-educated DC ALDH1a2 expression and was required for optimal TGF-β production. These data indicate that RA plays a critical role in the generation of mucosal DCs from bone marrow and in their functional activity.