An orally active antiallergic agent, M50367, skews the Th1/Th2 balance toward Th1 dominance by suppressing naive Th cell differentiation into Th2 cells in vitro. Administration results in the suppression of IgE synthesis and peritoneal eosinophilia in vivo. In this report, we determined that M50354 (an active metabolite of M50367) was a ligand for the aryl hydrocarbon receptor (AhR); the immunological effects of this compound on in vitro Th1/Th2 differentiation from naive Th cells and Th1/Th2 balance in vivo were manifested through binding to AhR. These effects were completely abolished in AhR-deficient mice. AhR expression in the naive Th cell was significantly up-regulated by costimulation of TCR and CD28. Suppression of naive Th cell differentiation into Th2 cells via binding of M50354 to AhR was associated with inhibition of GATA-3 expression in Th cells. In addition, forced expression of a constitutively active form of AhR or activation of AhR by the addition of representative ligands suppressed naive Th cell differentiation into Th2 cells. Based on these results, we conclude that AhR functions as a modulator of the in vivo Th1/Th2 balance through activation in naive Th cells.