OBJECTIVES: I. Determine modulation by fenretinide of surrogate endpoint markers of oral mucosal carcinogenesis in patients with oral dysplastic leukoplakia. II. Determine whether fenretinide will cause significant modulation of intermediate endpoint markers and significant regression of oral dysplastic leukoplakia in this patient population. III. Compare the ability of fenretinide and placebo to modulate surrogate endpoint biomarkers in this patient population. IV. Document the degree of recurrence of oral dysplastic leukoplakia after the administration of fenretinide, both at the same site and at new sites.