Immune homeostasis balances effective defense against pathogens with avoiding the adverse effect of immune overactivation. AhR is a ligand activated transcription factor that transduces chemical signals into transcription of a variety of target genes. In this study, we demonstrate that mosquito AhR and TIEG mediate a transcriptional axis modulating immune response negatively. When AhR was activated by diet delivery of agonist kynurenine, the anti-bacterial immunity was compromised with a reduced survival at 24hr post bacterial challenge. In contrast, when AhR was inhibited by antagonists, CH223191 or SR1, the immunity was enhanced with increased survival. The observed immune enhancement via AhR antagonist was corroborated by AhR gene silencing via RNAi, which resulted in increased survival upon the infection. Exploration of transcriptomes following AhR inactivation, either pharmacologically or genetically, highlighted a set of genes that are infection inducible and AhR dependent, including genes that may mediate immune suppressive functions. One of the genes, TIEG (TGF-β inducible early gene), a member of the Krüppel-like factor family of transcription factors, was further studied. TIEG is required for AhR mediated immune suppression. Silencing TIEG increased the survival and reversed the immune suppression mediated by kynurenine activation of AhR. Moreover, the mosquito cohorts with AhR or TIEG knockdown demonstrated similar transcriptomic responses upon infection. There were co-expression patterns shared between the respective cohorts treated with AhR antagonist or AhR and TIEG silencing. In the naïve mosquitoes where the IMD pathway was overactivated by silencing the inhibitor gene Caspar, co-silencing Caspar with AhR or TIEG resulted in a reduced survival, indicating the AhR-TIEG axis is required to prevent the adverse effect of over-activation of IMD without an infection. Together, AhR and TIEG are involved in a transcriptional axis that is critical for maintaining immune homeostasis.