The aryl hydrocarbon (or dioxin) receptor (AhR) is a ligand-activated basic helix-loop-helix (bHLH) protein that heterodimerizes with the bHLH protein AhR nuclear translocator (ARNT) to form a complex that binds to xenobiotic regulatory elements in the enhancers of target genes. We used a series of fusion proteins, with a heterologous DNA-binding domain, to study independently the trans-activating function of the human AhR and ARNT proteins in yeast. The results confirm that both the human AhR and ARNT contain carboxyl-terminal trans-activation domains. The AhR has a complex trans-activation domain that is composed of multiple segments that function independently and exhibit varying levels of activation. Furthermore, these regions within the AhR cooperate when linked together, resulting in a synergistic activation of transcription. Fusion proteins of the AhR and ARNT trans-activation domains with the LexA DNA-binding domain, expressed in bacteria and purified to near-homogeneity, stimulated transcription of a minimal promoter in vitro in yeast nuclear extracts. Using this in vitro transcription assay, it was also possible to demonstrate that the AhR and ARNT trans-activation domains, in the absence of a DNA-binding domain, inhibited activated and basal transcription. Furthermore, in vitro the receptor bound selectively to the basal transcription factors, the TATA-binding protein and TFIIF, whereas ARNT bound preferentially to TFIIF. Taken together, these results suggest that AhR and ARNT activate target gene expression, at least in part, through direct interactions with basal transcription factors.