The aryl hydrocarbon receptor (AhR) is a ligand-activated transcription factor that mediates the biological and toxicological effects of an AhR lacking the entire PASB structurally diverse chemicals, including halogenated aromatic hydrocarbons. Ligand-dependent transformation of the AhR into its DNA binding form involves a ligand-dependent conformational change, heat shock protein 90 (hsp90), dissociation from the AhR complex and AhR dimerization with the AhR nuclear translocator (ARNT) protein. The mechanism of AhR transformation was examined using mutational approaches and stabilization of the AhR:hsp90 complex with sodium molybdate. Insertion of a single mutation (F281A) in the hsp90-binding region of the AhR resulted in its constitutive (ligand-independent) transformation/DNA binding in vitro. Mutations of AhR residues within the Arg-Cys-rich region (R212A, R217A, R219A) and Asp371 (D371A) impaired AhR transformation without a significant effect on ligand binding. Stabilization of AhR:hsp90 binding with sodium molybdate decreased transformation/DNA binding of the wild type AhR but had no effect on constitutively active AhR mutants. Interestingly, transformation of the AhR in the presence of molybdate allowed detection of an intermediate transformation ternary complex containing hsp90, AhR, and ARNT. These results are consistent with a stepwise transformation mechanism in which binding of ARNT to the liganded AhR:hsp90 complex results in a progressive displacement of hsp90 and conversion of the AhR into its high affinity DNA binding form. The available molecular insights into the signaling mechanism of other Per-ARNT-Sim (PAS) domains and structural information on hsp90 association with other client proteins are consistent with the proposed transformation mechanism of the AhR.