The aryl hydrocarbon (or dioxin) receptor (AhR) is a ligand-activated basic helix-loop-helix (bHLH) protein that heterodimerizes with the bHLH protein ARNT (aryl hydrocarbon nuclear translocator) forming a complex that binds to xenobiotic regulatory elements in target gene enhancers. Genetic, biochemical, and molecular biology studies have revealed that the AhR mediates the toxic and biological effects of environmentally persistent dioxins and related compounds. Cloning of the receptor and its DNA-binding partner, ARNT, has facilitated detailed efforts to understand the mechanisms of AhR-mediated signal transduction. These studies have determined that this unique receptor consists of several functional domains and belongs to a subfamily of bHLH proteins that share a conserved motif termed the PAS domain. In addition, recent genetic studies have revealed that expression of the AhR is a requirement for proper embryonal development, which appears to be a common function shared by many other bHLH proteins. This review is a summary of recent molecular studies of AhR-mediated gene regulation.