2,3,7,8-Tetrachlorodibenzo-p-dioxin (TCDD) is known to cause a large number of adverse effects, mediated largely by its binding to the aryl-hydrocarbon receptor (AhR) and subsequent modulation of gene expression. It is thought that AhR mediates these effects through the untimely and disproportionate expression of specific genes. However, the exact mechanism, or the genes involved, through which TCDD leads to these effects is still unknown. This study reports the discovery of a novel target gene, epiregulin, which is regulated by TCDD-activated AhR. Epiregulin is a growth regulator which belongs to the epidermal growth factor (EGF) family. Using real time quantitative PCR (qPCR), it was established that TCDD upregulates epiregulin gene expression. The promoter region of epiregulin has a dioxin responsive element (DRE) 56 nucleotides upstream of the transcription start site, along with three potential Sp1 binding sites. Chromatin immunoprecipitation (ChIP) assays with an anti-AhR antibody showed promoter occupancy upon TCDD treatment. Luciferase reporter assays using a vector harboring the first 125 base pairs of the epiregulin rat promoter revealed an increase in signal on TCDD treatment, which was lost upon mutation of the DRE. Epiregulin and TCDD treatment mediated a dose-dependent increase in primary mouse keratinocyte growth. These results demonstrate that AhR directly increases epiregulin expression, which could play an important role in TCDD mediated tumor promotion observed in rodent models.