Fish are known to have two distinct classes of aryl hydrocarbon receptors, and their roles in mediating xenobiotic toxicity remain unclear. In this study, we have identified and characterized a cDNA tentatively named zebrafish AHR1 (zfAHR1). Analysis of the deduced amino acid sequence reveals that the protein is distinct from zfAHR2 and is more closely related to the mammalian aryl hydrocarbon receptor (AHR). zfAHR1 and zfAHR2 share 40% amino acid identity overall and 58% in the N-terminal half. The zfAHR1 gene maps to linkage group 16 in a region that shares conserved synteny with human chromosome 7 containing the human AHR, suggesting that the zfAHR1 is the ortholog of the human AHR. zfAHR2 maps to a separate linkage group (LG22). Both zfAHR mRNAs are expressed in early development, but they are differentially expressed in adult tissues. zfAHR2 can dimerize with zfARNT2b and binds with specificity to dioxin-responsive elements (DREs). Under identical conditions, zfAHR1/zfARNT2b/DRE complexes are formed; however, the interactions are considerably weaker. In COS-7 cells expressing zfARNT2b and zfAHR2, 2,3,7,8-tetrachlorodibenzo-p-dioxin (TCDD) exposure leads to a significant induction of dioxin-responsive reporter genes. In identical experiments, TCDD exposure fails to induce the reporter gene in zfAHR1-expressing cells. Ligand-binding experiments suggested that the differential zfAHR activities are attributable to differences in TCDD binding because only zfAHR2 exhibits high-affinity binding to [(3)H]TCDD or beta-naphthoflavone. Finally, using chimeric zfAHR1/zfAHR2 constructs, the lack of TCDD-mediated transcriptional activity was localized to the ligand-binding and C-terminal domains of zfAHR1.