Animals have evolved inducible enzymatic defenses to facilitate the biotransformation and elimination of toxic compounds encountered in the environment. The sensory component of this system consists of soluble receptors that regulate the expression of certain isoforms of cytochrome P450, other enzymes, and transporters in response to environmental chemicals. These receptors include several members of the steroid/nuclear receptor superfamily as well as the aryl hydrocarbon receptor (AHR), a member of the bHLH-PAS gene superfamily. In addition to its adaptive functions, the AHR serves poorly understood physiological roles; interference with those roles by dioxins and related chemicals causes toxicity. One approach to understanding the physiological significance of the AHR is to characterize its structure, function, and regulation in diverse species, including mammals, birds, fish, and invertebrates. These animal groups include model species with unique features that can be exploited to broaden our understanding of AHR function. Studies carried out in diverse species also provide phylogenetic information that allows inferences about the evolutionary history of the AHR. This review summarizes the current understanding of AHR diversity among animal species and the evolution of the AHR signaling pathway, as inferred from molecular studies in vertebrate and invertebrate animals. The AHR gene has undergone duplication and diversification in vertebrate animals, resulting in at least three members of an AHR gene family: AHR1, AHR2, and AHR repressor. The inability of invertebrate AHR homologs to bind dioxins and related chemicals, along with other evidence, suggests that the adaptive role of the AHR as a regulator of xenobiotic metabolizing enzymes may have been a vertebrate innovation. The physiological functions of the AHR during development appear to be ancestral to the adaptive functions. Sensitivity to the developmental toxicity of dioxins and related chemicals may have had its origin in the evolution of dioxin-binding capacity of the AHR in the vertebrate lineage.