Xenobiotic responsive element (XRE) is an inducible enhancer element that drives inducible expression of P-4501A1 gene in response to xenobiotic inducers. The XRE-binding factor appears in the nuclei of Hepa-1 cells treated with 3-methylcholanthrene (3-MC). Association of the Ah receptor and Arnt (Ah receptor nuclear translocator) in an XRE-binding complex was examined by anti-Ah receptor and Arnt antibodies. Both antibodies inhibited the sequence-specific XRE-binding activity of nuclear extracts from 3-MC-treated Hepa-1 cells and of the cytosolic fraction which was prepared from the nontreated cells and treated in vitro with 3-MC. These results indicate that Ah receptor and Arnt proteins are components of the XRE-binding factor and suggest that Arnt as well as the Ah receptor are localized in the cytosol of nontreated cells. The Ah receptor present in C4 cells, a mutant of Hepa-1 cells defective in the Arnt function, showed an inducer-dependent association with Arnt synthesized in an in vitro translation system. Co-transfection of the expression plasmids of the Ah receptor and Arnt exhibited synergistically more activated transcription from a reporter gene pMC6.3k consisting of the P-4501A1 gene promoter and enhancer than transfection with either of the two plasmids alone. These findings indicate that the Ah receptor and Arnt proteins form a complex that activates transcription in an inducer-dependent manner.