In utero 2,3,7,8-tetrachlorodibenzo-p-dioxin (TCDD) exposure causes abnormal ventral, dorsolateral, and anterior prostate development in wild-type but not aryl hydrocarbon receptor (AhR) null mutant C57BL/6 mice. Experiments have now been conducted to test the hypothesis that TCDD causes an AhR-dependent inhibition of the earliest visible stage of prostate development, the formation of prostatic buds by urogenital sinus (UGS) epithelium. A novel method for viewing budding was developed that uses scanning electron microscopy of isolated UGS epithelium instead of three-dimensional reconstruction of serial histological sections of intact UGS. In the initial experiment, the time course for prostatic epithelial bud formation in vehicle- and TCDD-exposed wild-type C57BL/6J mice was determined. A single maternal dose of TCDD (5 mug/kg) on gestation day 13 delayed the appearance of dorsal, lateral, and anterior buds by about one day, reduced dorsolateral bud number, and prevented ventral buds from forming. No such effects were seen in TCDD-exposed AhR null mutant fetuses, while AhR null mutation, alone, had no detectable effect on budding. Treatment of wild-type dams with sufficient 5alpha-dihydrotestosterone (DHT) to masculinize female fetuses failed to protect against the inhibition of budding caused by TCDD. These results demonstrate that in utero TCDD exposure causes an AhR-dependent inhibition of prostatic epithelial bud formation commensurate with its inhibitory effects on ventral and dorsolateral prostate development, and that the inhibition of budding is not due to insufficient DHT. Inhibited bud formation appears to be the primary cause of abnormal prostate development in TCDD-exposed mice.