Organisms encounter a wide range of foreign compounds—or ‘xenobiotics’—with potentially harmful consequences. The cytochrome P450 (CYP) enzymes metabolize xenobiotics and thus are a primary defence against these compounds. Increased expression of specific CYP genes in response to particular xenobiotics is a central component of this defence, although such induction can also increase production of toxic metabolites. Here we show that the nuclear receptor CAR mediates the response evoked by a class of xenobiotics known as the ‘phenobarbital-like inducers’. The strong activation of Cyp2b10 gene expression by phenobarbital, or by the more potent TCPOBOP, is absent in mice lacking the CAR gene. These animals also show decreased metabolism of the classic CYP substrate zoxazolamine and a complete loss of the liver hypertrophic and hyperplastic responses to these inducers. Cocaine causes acute hepatotoxicity in wild-type mice previously exposed to phenobarbital-like inducers and this toxicity is also absent in the CAR-deficient animals. Thus, loss of CAR function alters sensitivity to toxins, increasing or decreasing it depending on the compound. Modulation of CAR activity in humans may significantly affect metabolism of drugs and other xenobiotics.