Gene activation by the aryl hydrocarbon receptor (AHR) and its DNA binding partner, the aryl hydrocarbon receptor nuclear translocator (ARNT) requires a number of sequential steps that occur following the binding of ligand and entry of the AHR into the nuclear compartment. This includes heterodimerization of the AHR and ARNT, formation of the appropriate amino acid/nucleotide contacts at the GCGTG recognition site and interactions between either the AHR or ARNT with proteins that facilitate changes in chromatin structure. The majority of these steps are likely modulated by changes in both phosphorylation and oxidation status of the AHR, ARNT and associated proteins. Studies of both the basic helix-loop-helix transcription factors and the nuclear hormone receptor family can provide significant insights into how this unique signaling pathway activates its target genes.