The aryl hydrocarbon receptor (AhR) is a ligand-activated transcription factor that mediates a spectrum of toxic and biological effects of 2,3,7,8-tetrachlorodibenzo-p-dioxin and related compounds. Several reports have shown that the AhR plays an important role in the control of cell-cycle progression, and this function is thought to be partly associated with the tumor promotion activity of dioxin. However, the underling mechanisms are not fully understood. We have previously shown that overexpression of AhR, as well as AhR ligand treatment, stimulates cell proliferation of human lung cancer A549 cells. In AhR-activated cells, the expression levels of DNA synthesis-related genes such as proliferating cell nuclear antigen (PCNA) and RFC38 are notably increased. Expression of these genes is mainly regulated by E2F1, a transcription factor that is crucial for transition of the cell cycle from G1 to S phase. We show here that the transcriptional activity of E2F1 is increased by the AhR agonist treatment and that this effect depends on the presence of AhR. Functional mapping of AhR showed that the Per-Arnt-Sim (PAS) B domain is required for promotion of E2F1 activity. The mechanism involves formation of a complex of AhR and E2F1 on the regulatory region in the E2F1 target gene, followed by recruitment of coactivator activator for thyroid hormone and retinoid receptors (ACTR). Consequently, the results in this study indicate the physiological function of AhR as a potent transcriptional coactivator of E2F1-dependent transcription and implicate the AhR-E2F1 interaction as a part of the mechanism by which AhR/Arnt promotes cell proliferation.