AhR binds several exogenous ligands such as natural plant flavonoids, polyphenols and indoles, as well as synthetic polycyclic aromatic hydrocarbons and dioxin-like compounds.

The AhR protein contains several domains critical for function and is classified as a member of the basic helix-loop-helix/Per-Arnt-Sim (bHLH/PAS) family of transcription factors.

Also contained with the AhR are two PAS domains, PAS-A and PAS-B, which are stretches of 200–350 amino acids that exhibit a high sequence homology to the protein domains that were originally found in the Drosophila genes period (Per) and single-minded (Sim) and in AhR's dimerization partner the aryl hydrocarbon receptor nuclear translocator (ARNT).

[13] Finally, a glutamine-rich (Q-rich) domain is located in the C-terminal region of the protein and is involved in co-activator recruitment and transactivation.

Naturally occurring compounds that have been identified as ligands of Ahr include derivatives of tryptophan such as indigo dye and indirubin,[18] tetrapyrroles such as bilirubin,[19] the arachidonic acid metabolites lipoxin A4 and prostaglandin G,[20] modified low-density lipoprotein[21] and several dietary carotenoids.

However, work by Savouret et al. has shown this may not be the case since their findings demonstrate that 7-ketocholesterol competitively inhibits Ahr signal transduction.

The mammalian AhR needs no exogenous ligand-dependent activation to be functional, and this appears to be the case for its role in the regulation of the expression of some transforming growth factor-beta (TGF-b) isoforms.

[12][31][33][38][39][40] AIP interacts with carboxyl-terminal of Hsp90 and binds to the AhR nuclear localization sequence (NLS) preventing the inappropriate trafficking of the receptor into the nucleus.

[45][46] Upon ligand binding to AhR, AIP is released resulting in exposure of the NLS, which is located in the bHLH region,[47] leading to import into the nucleus.

[40][49][50][51] The activated AhR/ARNT heterodimer complex is then capable of either directly or indirectly interacting with DNA by binding to recognition sequences located in the 5’- regulatory region of dioxin-responsive genes.

Evolution of the receptor in vertebrates resulted in the ability to bind ligands and might have helped humans evolve to tolerate smoky fires.

[64] Despite lacking a clear endogenous ligand, AhR appears to play a role in the differentiation of many developmental pathways, including hematopoiesis,[65] lymphoid systems,[66][67] T-cells,[68] neurons,[69] and hepatocytes.

Evidence of this response was first observed from the induction of cytochrome P450, family 1, subfamily A, polypeptide 1 (Cyp1a1) resultant from TCDD exposure, which was determined to be directly related to activation of the AhR signaling pathway.

For example, the polycyclic aromatic hydrocarbon benzo[a]pyrene (BaP), a ligand for AhR, induces its own metabolism and bioactivation to a toxic metabolite via the induction of CYP1A1 and CYP1B1 in several tissues.

In addition, TCDD induces a broad spectrum of biochemical and toxic effects, such as teratogenesis, immunosuppression and tumor promotion.