The intracellular dioxin [aryl hydrocarbon, Ah] receptor is a ligand–activated transcription factor that mediates the adaptive and toxic responses to environmental pollutants such as 2,3,7,8-tetrachlorodibenzo-p-dioxin and structurally related congeners. Whereas the ligand-free receptor is characterized by its association with the molecular chaperone hsp90, exposure to ligand initiates a multi-step activation process involving nuclear translocation, dissociation from the hsp90 complex and dimerization with its partner protein Arnt. In this study, we have characterized a dioxin receptor deletion mutant lacking the minimal ligand binding domain (LBD) of the receptor. This mutant did not bind ligand and localized constitutively to the nucleus. However, this protein was functionally inert since it failed to dimerize with Arnt and bind DNA. In contrast, a dioxin receptor deletion mutant lacking the minimal PAS B motif but maintaining the N-terminal half of the LBD showed constitutive dimerization with Arnt, bound DNA and activated transcription in a ligand–independent manner. Interestingly, this mutant showed a more potent functional activity than the dioxin-activated wild-type receptor in several different cell lines. In conclusion, the constitutively active dioxin receptor may provide an important mechanistic tool to investigate receptor-mediated ragulatory pathways in closer detail.