2,3,7,8-Tetrachlorodibenzo-p-dioxin (TCDD) and isosteric halogenated analogs produce a spectrum of pathologic changes in the epidermis of humans. In this study, the actions of TCDD on cultured human epidermal cells were characterized to determine whether these cells are an appropriate in vitro model to examine the mechanisms of TCDD toxicity to human skin. The differential staining properties of TCDD-treated cultures indicated that TCDD decreased basal cell numbers and increased the degree of keratinization. Histologic examination of cross-sections of the cultures confirmed a loss of small nucleated cells and increased cell layering in response to TCDD. TCDD produced no change in total cell number or cell protein, but decreased the number of small (basal) cells and DNA synthesis. TCDD increased the number of cells containing spontaneous envelopes, as well as the number of envelope-competent cells. The quantitative changes observed in these parameters were consistent with a TCDD-induced commitment of proliferating cells to terminal differentiation. TCDD also decreased epidermal growth factor (EGF) specific binding. Maximal changes in EGF binding occurred after 4 days, and in small cell number after 5 days. The decreases in EGF binding and small cell number were stereospecific and concentration dependent (EC50, 1 to 2 nM), implicating the human Ah receptor in mediating these responses to TCDD. These data indicate that TCDD treatment produces hyperkeratinization in cultured human epidermal cells. It is proposed that TCDD acts on epidermal basal cells to enhance terminal differentiation through mechanisms regulated at least in part by the Ah receptor.