We developed an inducible in vivo reporter system to examine expression of the aryl hydrocarbon receptor (AhR) during development in zebrafish (Danio rerio). AhR is a ligand-activated transcription factor that mediates the toxic actions of environmental contaminants such as 2,3,7,8-tetrachlorodibenzo-p-dioxin (TCDD). Induction of cytochrome P4501A1 (CYP1A1) is an early biomarker of AhR activation. A 1905 base pair region of the human CYP1A1 promoter/enhancer region was regulated by AhR in zebrafish liver cells after exposure to TCDD (10 nM) in a transient transfection assay. This regulatory region was fused to the cDNA sequence encoding green fluorescent protein (GFP) of jellyfish (Aequorea victoria). Transgenic zebrafish were generated to express this AhR-regulated GFP construct. Injected fish exposed to TCDD exhibited induction of GFP in the eye, nose, and vertebrae of zebrafish embryos (48 and 72 hr after fertilization) compared to vehicle controls (DMSO), which did not express GFP. To investigate whether AhR-regulated GFP expression correlated with sites of TCDD toxicity, we exposed wild-type zebrafish to DMSO or TCDD and examined them for morphologic abnormalities. By 5 days after fertilization, TCDD-exposed fish exhibited gross dysmorphogenesis in cranio-facial and vertebral development.