The aryl hydrocarbon receptor (AhR) is best known as a mediator of toxicity of a diverse family of xenobiotic chemicals such as dioxins and PCBs. However, many naturally occurring compounds also activate AhR. One such compound, 2-(1'H-indole-3'-carbonyl)-thiazole-4-carboxylic acid methyl ester (ITE), was isolated from tissue and found to be potent in preliminary tests [J. Song, M. Clagett-Dame, R.E. Peterson, M.E. Hahn, W.M. Westler, R.R. Sicinski, H.F. DeLuca, Proc. Natl. Acad. Sci. USA 99 (2002) 14694-14699]. We have synthesized ITE and [(3)H]ITE and further evaluated its AhR activity in several in vitro and in vivo assays in comparison with the toxic ligand, TCDD. AhR in Hepa1c1c7 cell cytosol bound [(3)H]ITE with high affinity and the AhR.ITE complex formed in vitro bound dioxin response element (DRE) oligonucleotide as potently as TCDD.AhR. In cells treated with ITE, nuclear translocation of AhR, and induction of CYP1A1 protein and of a DRE-dependent luciferase reporter gene were observed. ITE administered to pregnant DRE-LacZ transgenic mice activated fetal AhR, observed as X-gal staining in the same sites as in TCDD-treated mice. However, unlike TCDD, ITE did not induce cleft palate or hydronephrosis. TCDD but not ITE induced thymic atrophy in young adult mice, but both ITE and TCDD caused similar loss of cells and alterations of cell profiles in cultured fetal thymi. These data demonstrate that ITE is a potent AhR agonist in cell extracts, cultured cells, and intact animals, but does not cause the toxicity associated with the more stable xenobiotic ligand, TCDD.