The dioxin receptor is a gene regulatory protein which exhibits many structural and functional similarities to steroid hormone receptors. In this study we compare the subunit composition of two forms of the dioxin receptor, sedimenting at approximately 9S and approximately 6S respectively, which are present in nuclear extract from wild-type Hepa 1c1c7 mouse hepatoma cells following treatment in vivo with dioxin. The nuclear approximately 9S receptor form contained the 90 kd heat shock protein, hsp90. As assessed by a gel mobility shift assay, this receptor form did not bind to the xenobiotic response element (XRE) of the target gene cytochrome P-450 IA1. In contrast, the smaller approximately 6S receptor form did not contain any immunochemically detectable hsp90. Moreover, this receptor form specifically bound to the XRE recognition sequence. Thus, the specific DNA binding activity of the dioxin receptor was inhibited by association with hsp90, and the approximately 9S dioxin receptor species could be regarded as a nonactive receptor form. Neither the approximately 9S nor the approximately 6S receptor forms were detected in nuclear extract from a dioxin treated mutant clone of Hepa 1 that expresses a nuclear translocation deficient receptor phenotype. We conclude that activation of the dioxin receptor is, at least, a two step process involving binding of the ligand and dissociation of hsp90 from the ligand-binding receptor protein. Inhibition of the DNA binding activity of transcription factors by protein--protein interaction has also been described for several steroid hormone receptors and for the NF kappa B factor.(ABSTRACT TRUNCATED AT 250 WORDS)