The aryl hydrocarbon receptor (AHR) is not essential to survival, but does act as a key regulator of many normal physiological events. The role of this receptor in toxicological processes has been studied extensively, primarily employing the high-affinity ligand 2,3,7,8-tetrachlorodibenzo-p-dioxin (TCDD). However, regulation of physiological responses by endogenous AHR ligands remains to be elucidated. Here, we review developments in this field, with a focus on 6-formylindolo[3,2-b]carbazole (FICZ), the endogenous ligand with the highest affinity to the receptor reported to date. The binding of FICZ to different isoforms of the AHR seems to be evolutionarily well conserved and there is a feedback loop that controls AHR activity through metabolic degradation of FICZ via the highly inducible cytochrome P450 1A1. Several investigations provide strong evidence that FICZ plays a critical role in normal physiological processes and can ameliorate immune diseases with remarkable efficiency. Low levels of FICZ are pro-inflammatory, providing resistance to pathogenic bacteria, stimulating the anti-tumor functions, and promoting the differentiation of cancer cells by repressing genes in cancer stem cells. In contrast, at high concentrations FICZ behaves in a manner similar to TCDD, exhibiting toxicity toward fish and bird embryos, immune suppression, and activation of cancer progression. The findings are indicative of a dual role for endogenously activated AHR in barrier tissues, aiding clearance of infections and suppressing immunity to terminate a vicious cycle that might otherwise lead to disease. There is not much support for the AHR ligand-specific immune responses proposed, the differences between FICZ and TCDD in this context appear to be explained by the rapid metabolism of FICZ.