The ligand-activated aromatic hydrocarbon receptor (AHR) dimerizes with the AHR nuclear translocator (ARNT) to form a functional complex that transactivates expression of the cytochrome P-450 CYP1A1 gene and other genes in the dioxin-inducible [Ah] gene battery. Previous work from this laboratory has shown that the activity of the CYP1A1 enzyme negatively regulates this process. To study the relationship between CYP1A1 activity and Ah receptor activation we used CYP1A1-deficient mouse hepatoma c37 cells and CYP1A1- and AHR-deficient African green monkey kidney CV-1 cells. Using gel mobility shift and luciferase reporter gene expression assays, we found that c37 cells that had not been exposed to exogenous Ah receptor ligands already contained transcriptionally active AHR-ARNT complexes, a finding that we also observed in wild-type Hepa-1 cells treated with Ellipticine, a CYP1A1 inhibitor. In CV-1 cells, transient expression of AHR and ARNT leads to high levels of AHR-ARNT-dependent luciferase gene expression even in the absence of an agonist. Using a green fluorescent protein-tagged AHR, we showed that elevated reporter gene expression correlates with constitutive nuclear localization of the AHR. Transcriptional activation of the luciferase reporter gene observed in CV-1 cells is significantly decreased by (i) expression of a functional CYP1A1 enzyme, (ii) competition with chimeric or truncated AHR proteins containing the AHR ligand-binding domain, and (iii) treatment with the AHR antagonist alpha-naphthoflavone. These results suggest that a CYP1A1 substrate, which accumulates in cells lacking CYP1A1 enzymatic activity, is an AHR ligand responsible for endogenous activation of the Ah receptor.