The RARA gene encodes for the retinoic acid receptor alpha, which is a transcription factor activated by retinoic acid and is critical for cellular differentiation and proliferation. In acute promyelocytic leukemia (APL), a translocation mutation creates a dominant-negative fusion protein (PML-RARA) that inhibits normal differentiation of promyelocytes, leading to leukemia. Treatments like all-trans retinoic acid (ATRA) can restore differentiation by degrading the fusion protein and activating differentiation pathways.