The arylhydrocarbon receptor (AhR), a ligand-activated transcription factor, is differentially distributed in tissues and abundant in the thymus epithelium. The activated AhR can induce the transcription of an array of genes, including genes of cell growth and differentiation. Neither the physiological function of the AhR nor its putative natural ligand is known. 2,3,7,8-tetrachlorodibenzo-p-dioxin (TCDD) is a xenobiotic high-affinity activator of the AhR, and appears to be essential for most of the multifold toxic effects of TCDD. Activation of the AhR by even low doses of TCDD results in general immunosuppression and thymus hypoplasia. TCDD exposure interferes with thymocyte development; for instance, it reduces the proliferation rate of the very immature (CD4- CD8- and CD4- CD8+ HSA+) thymocytes, leads to preferential emigration of very immature cells, and drastically skews the differentiation of thymocyte subpopulations towards mature CD4- CD8+ alphabeta TCRhigh thymocytes. As shown here, in fetal thymi of AhR-deficient mice, thymocyte differentiation kinetics as defined by CD4 and CD8 surface markers, was comparable to AhR+/+ C57BL/6 mice. Also, the cell emigration characteristics were similar to AhR+/+ mice. These parameters were refractory to TCDD exposure in the AhR-/- mice, but not in the C57BL/6 mice. However, in AhR deficient mice at gestation day 15 more CD4- CD8- immature cells bore high amounts of the (alphabeta-T-cell receptor. Also, fetal thymocyte numbers were significantly lower, as compared to strain C57BL/6. Thus, the AhR is the mediator of thymotoxic effects of TCDD.