Vascular endothelial growth factor (VEGF) has been proposed as an important regulator of amniotic fluid absorption across the amnion into the fetal vasculature on the surface of the placenta. However, the activators of VEGF expression and action in the amnion have not been identified. Using the pregnant sheep model, we aimed to investigate the presence of the retinoic acid (RA) pathway in ovine amnion and to determine its effect on VEGF expression. Further, we explored relationships between RA receptors and VEGF and tested the hypothesis that RA modulates intramembranous absorption (IMA) through induction of amnion VEGF in sheep fetuses subjected to altered IMA rates. Our study showed that RA receptor isoforms were expressed in sheep amnion, and RA response elements (RAREs) were identified in ovine RARβ and VEGF gene promoters. In ovine amnion cells, RA treatment upregulated RARβ messenger RNA (mRNA) and increased VEGF transcript levels. In sheep fetuses, increases in IMA rate was associated with elevated VEGF mRNA levels in the amnion but not in the chorion. Further, RARβ mRNA was positively correlated with VEGF mRNA levels in the amnion and not chorion. We conclude that an RA pathway is present in ovine fetal membranes and that RA is capable of inducing VEGF. The finding of a positive relationship between amnion VEGF and RARβ during altered IMA rate suggests that the retinoid pathway may play a role through VEGF in regulating intramembranous transport across the amnion.