Cranial neural crest cells (CNCCs) give rise to the majority of the skeletal elements of the face. The precise morphogenesis of the face relies on highly coordinated actions of CNCCs, requiring each CNCC to obtain correct positional identity. As a diffusive signaling molecule, retinoic acid (RA) is known to regulate the positional identities along the anterior-posterior axis of the developing hindbrain by activating the Hox family of transcription factors. However, whether RA also has a direct role in regulating the positional identities of Hox-negative CNCCs, which give rise to the skeletal framework of the face, was unclear. In this study, we show that RA acts as a local environmental cue that patterns the Hox-negative CNCCs by activating the Alx family of transcription factors. We observed midfacial dysplasia and midline facial clefting in chick embryos after blocking RA signaling with an inverse pan-RAR agonist. Gene expression analysis revealed that this morphological defect is associated with the transformation of frontonasal neural crest identity toward a first pharyngeal arch (PA1)-like identity, a patterning defect that was also observed in Alx1 and Alx4 compound mutant mouse embryos. We further showed that both Alx1 and Alx4 are regulated by RA through cell-autonomous RA receptor (RAR) signaling. Mechanistically, RA signaling regulates Alx1 through an evolutionarily conserved distal enhancer located upstream of Alx1 within the intronic region of the gene Lrriq1, whereas the RA-responsiveness of Alx4 is conferred by its promoter. These findings establish a mechanistic linkage between RA signaling and Alx genes and provide novel insights into the craniofacial defects associated with disrupted RA signaling.