In the budding tunicate, Polyandrocarpa misakiensis, retinoic acid (RA) applied to buds promotes transdifferentiation of somatic cells to form the secondary body axis. This study investigated the gene cascade regulating such RA-triggered transdifferentiation in tunicates. Genes encoding retinoic acid receptor (RAR) and retinoid X receptor (RXR) were induced during transdifferentiation, and they responded to all-trans RA or 13-cis RA in vivo, whereas 9-cis RA had the least effects, demonstrating differences in the ligand preference between budding tunicates and vertebrates. In contrast to RAR mRNA, RXR mRNA could induce transdifferentiation-related genes such as RXR itself, ERK, and MYC in an RA-dependent manner and also induced β-catenin (β-CTN) RA-independently when it was introduced in vitro into tunicate cell lines that do not express endogenous RAR or RXR. Small interfering RNA (siRNA) of RXR dramatically attenuated not only RXR but also ERK and β-CTN gene activities. An ERK inhibitor severely blocked wound healing and dedifferentiation. β-CTN siRNA suppressed morphogenesis and redifferentiation, similar to RXR siRNA. These results indicate that in P. misakiensis, the main function of RA is to trigger positive feedback regulation of RXR rather than to activate RAR for unlocking downstream pathways for transdifferentiation. Our results may reflect an ancient mode of RA signaling in chordates.