The CYP1A1 gene encodes microsomal cytochrome P4501A1 that catalyzes the metabolism of many xenobiotics, including the oxygenation of polycyclic aromatic hydrocarbons (PAH). Induction of CYP1A1 enhances the metabolism of PAHs, and therefore, represents an adaptive response to chemical exposure in mammalian cells. Mechanistic studies reveal an AhR/DRE paradigm for the induction, which involves activation of the aryl hydrocarbon receptor (AhR) by an agonist, dimerization of AhR with the Ah recceptor nuclear translocator (Arnt), followed by binding of the AhR/Arnt heterodimer to the dioxin-responsive enhancer (DRE) and transcription of the gene. The AhR mediated transcription is tightly regulated through, at least, two mechanisms: (a) the cytoplasmic AhR interacts with hsp90 and an immunophilin chaperone AIP for proper folding and receptivity, and (b) the agonist-activated, nuclear AhR is degraded through the ubiquitin-26S proteasome mediated protein turnover, such that the transcription by AhR is controlled at a physiologically adequate level. In addition to CYP1A1 induction, AhR mediates a broad range of biological responses to CYP1A1 inducers, typified by the environmental contaminant dioxin, via modulating gene expression. Thus, mechanistic studies of CYP1A1 induction have provided insights into P450 induction, PAH carcinogenesis, dioxin action, AhR function, and receptor-mediated mammalian gene expression.