Mesenchymal stem cells (MSCs) can differentiate into neurons in an appropriate cellular environment. Retinoid signaling pathway is required in neural development. However, the effect and mechanism through retinoid signaling regulates neuronal differentiation of MSCs are still poorly understood. Here, we report that all-trans-retinoic acid (ATRA) pre-induction improved neuronal differentiation of rat MSCs. We found that, when MSCs were exposed to different concentrations of ATRA (0.01–100 μmol/L) for 24 h and then cultured with modified neuronal induction medium (MNM), 1 μmol/L ATRA pre-induction significantly improved neuronal differentiation efficiency and neural-cell survival. Compared with MNM alone induced neural-like cells, ATRA/MNM induced cells expressed higher levels of Nestin, neuron specific enolase (NSE), microtubule-associated protein-2 (MAP-2), but lower levels of CD68, glial fibrillary acidic protein (GFAP), and glial cell line-derived neurotrophic factor(GDNF), also exhibited higher resting membrane potential and intracellular calcium concentration, supporting that ATRA pre-induction promotes maturation and function of derived neurons but not neuroglia cells from MSCs. Endogenous retinoid X receptors (RXR) RXRα and RXRγ (and to a lesser extent, RXRβ) were weakly expressed in MSCs. But the expression of RARα and RARγ was readily detectable, whereas RARβ was undetectable. However, at 24 h after ATRA treatment, the expression of RARβ, not RARα or RARγ, increased significantly. We further found the subnuclear redistribution of RARβ in differentiated neurons, suggesting that RARβ may function as a major mediator of retinoid signaling during neuronal differentiation from MSCs. ATRA treatment upregulated the expression of Vimentin and Stra13, while it downregulated the expression of Brachyury in MSCs. Thus, our results demonstrate that pre-activation of retinoid signaling by ATRA facilitates neuronal differentiation of MSCs.