The aryl hydrocarbon receptor (AhR), a basic helix-loop-helix/Per-Arnt-Sim transcription factor, mediates many of the toxic and biological effects of the environmental contaminant, 2,3,7,8-tetrachlorodibenzo-p-dioxin, which include the transcriptional activation of dioxin-responsive genes such as CYP1A1. Many aspects of this process are known; however, the mechanism of transcriptional activation and the proteins that are key to this process remain to be determined. The hAhR has a complex transactivation domain, composed of three potentially distinct subdomains. Deletional analysis of the hAhR transactivation domain indicates that removal of the P/S/T-rich subdomain enhances transcriptional activity, whereas the Q-rich subdomain is critical for hAhR transactivation potential, and the acidic subdomain by itself fails to activate a dioxin response element-driven reporter gene. Deletional analysis of the Q-rich subdomain identified a critical stretch of 23 amino acids between residues 666 and 688 of the hAhR, which are required for transactivation potential. Alanine scanning mutagenesis of this region identified a leucine residue (Leu-678), which is required for hAhR activity. Functional analysis of this point mutant revealed that it is capable of binding ligand, heterodimerization, and subsequent binding to dioxin response elements. Further, when hAhR/L678A and hAhR containing only the acidic subdomain were overexpressed they acted as dominant negative receptors and repressed wild-type hAhR activity. In addition, the hAhR/L678A failed to activate CYP1A1 gene transcription in transfected BP-8 cells and exhibited reduced binding to RIP140 in vitro. Thus, Leu-678 appears to be critical for efficient transactivation activity of the hAhR and appears to disrupt recruitment of co-regulators.