Retinoic acid (RA) has been shown to regulate muscle differentiation in vitro. Here, we have investigated the role of RA signalling during embryonic myogenesis in zebrafish. We have altered RA signalling from gastrulation stages onwards by either inhibiting endogenous RA synthesis using an inhibitor of retinaldehyde dehydrogenases (DEAB) or by addition of exogenous RA. DEAB reduces expression of the myogenic markers myoD and myogenin in somites, whereas RA induces increased expression of these genes and strongly induces premature myoD expression in the presomitic mesoderm (psm). The expression dynamics of myf5 in presomitic and somitic mesoderm suggest that RA promotes muscle differentiation, a role supported by the fact that RA activates expression of fast myosin, while DEAB represses it. We identify Fgf8 as a major relay factor in RA-mediated activation of myogenesis. We show that fgf8 expression in somites and anterior psm is regulated by RA, and find that in the absence of Fgf8 signalling in the acerebellar mutant RA fails to promote myoD expression. We propose that, in the developing embryo, localised synthesis of RA by Raldh2 in the anterior psm and in somites activates fgf8 expression which in turn induces the expression of myogenic genes and fast muscle differentiation.