The halogenated aromatic hydrocarbon 2,3,7,8-tetrachlorodibenzo-p-dioxin (TCDD, dioxin) is a persistent, widespread, potentially toxic environmental contaminant, which is a potent inducer of aryl hydrocarbon hydroxylase activity in the liver and other tissues. TCDD induces hydroxylase activity by increasing the rate of transcription of the CYP1A1 gene. Activation of CYP1A1 transcription requires the binding of TCDD to an intracellular protein, the Ah receptor, followed by the binding of the liganded receptor to a dioxin-responsive enhancer that is located upstream from the CYP1A1 gene. The liganded receptor recognizes a specific DNA sequence, which is present in multiple copies within the enhancer. The receptor-enhancer interaction occurs within the major groove of the DNA helix. DNA methylation in vitro interferes with the receptor-enhancer interaction and, therefore, has the potential to inhibit the biological response to TCDD.