The aryl hydrocarbon receptor (AHR) is a ligand-activated transcription factor that regulates gene expression following activation by TCDD (2,3,7,8-tetrachlorodibenzo-p-dioxin) or a variety of other synthetic and natural compounds. Previous studies have identified two AHR genes, AHR1 and AHR2, in zebrafish (Danio rerio), a widely used model species for studying vertebrate development and an emerging model in developmental toxicology. Zebrafish AHR2 binds TCDD with high affinity, is transcriptionally active and has a major role in mediating the developmental toxicity of TCDD. Zebrafish AHR1 lacks the ability to bind TCDD and activate transcription, and has no known function. In the present study, we report a new zebrafish AHR, designated AHR1B, which shares 34% amino acid sequence identity with AHR1 (AHR1A). The ahr1b gene resides on chromosome 22, adjacent to ahr2, whereas the ahr1a gene is located on chromosome 16. AHR1B is expressed in embryos as early as 24 hours post-fertilization and increases through the next 2 days, but expression is not inducible by TCDD. In contrast with the previously identified AHR1A, in vitro-expressed AHR1B protein exhibits specific, high-affinity binding of [3H]TCDD. Furthermore, AHR1B is able to activate the transcription of a reporter gene under the control of AHR response elements with an efficacy comparable with that of AHR2, but with a higher EC50. We speculate that AHR1B may have a physiological role, such as in embryonic development, whereas AHR2 mediates the response to xenobiotics.