Retinoic acid (RA) is an important developmental signaling molecule responsible for the patterning of multiple vertebrate tissues. RA is also a potent teratogen, causing multi-organ birth defects in humans. Endogenous RA levels must therefore be tightly controlled in the developing embryo. We used a microarray approach to identify genes that function as negative feedback regulators of retinoic acid signaling. We screened for genes expressed in early somite-stage embryos that respond oppositely to treatment with RA versus RA antagonists and validated them by RNA in situ hybridization. Focusing on genes known to be involved in RA metabolism, we determined that dhrs3a, which encodes a member of the short-chain dehydrogenase/reductase protein family, is both RA dependent and strongly RA inducible. Dhrs3a is known to catalyze the reduction of the RA precursor all-trans retinaldehyde to vitamin A; however, a developmental function has not been demonstrated. Using morpholino knockdown and mRNA over-expression, we demonstrate that Dhrs3a is required to limit RA levels in the embryo, primarily within the central nervous system. Dhrs3a is thus an RA-induced feedback inhibitor of RA biosynthesis. We conclude that retinaldehyde availability is an important level at which RA biosynthesis is regulated in vertebrate embryos.