Amino acids are fundamental units of molecular components that are essential for sustaining life; however, their metabolism is closely interconnected to the control systems of cell function. Tryptophan (Trp) is an essential amino acid catabolized by complex metabolic pathways. Several of the resulting Trp metabolites are bioactive and play central roles in physiology and pathophysiology. Additionally, various physiological functions of Trp metabolites are mutually regulated by the gut microbiota and intestine to coordinately maintain intestinal homeostasis and symbiosis under steady state conditions and during the immune response to pathogens and xenotoxins. Cancer and inflammatory diseases are associated with dysbiosis- and host-related aberrant Trp metabolism and inactivation of the aryl hydrocarbon receptor (AHR), which is a receptor of several Trp metabolites. In this review, we focus on the mechanisms through which Trp metabolism converges to AHR activation for the modulation of immune function and restoration of tissue homeostasis and how these processes can be targeted using therapeutic approaches for cancer and inflammatory and autoimmune diseases.