A stochastic model of nuclear receptor-mediated transcription was developed based on activation of the aryl hydrocarbon receptor (AHR) by 2,3,7,8-tetrachlorodibenzodioxin (TCDD) and subsequent binding the activated AHR to xenobiotic response elements (XREs) on DNA. The model was based on effects observed in cells lines commonly used as in vitro experimental systems. Following ligand binding, the AHR moves into the cell nucleus and forms a heterodimer with the aryl hydrocarbon nuclear translocator (ARNT). In the model, a requirement for binding to DNA is that a generic coregulatory protein is subsequently bound to the AHR-ARNT dimer. Varying the amount of coregulator available within the nucleus altered both the potency and efficacy of TCDD for inducing for transcription of CYP1A1 mRNA, a commonly used marker for activation of the AHR. Lowering the amount of available cofactor slightly increased the EC50 for the transcriptional response without changing the efficacy or maximal response. Further reduction in the amount of cofactor reduced the efficacy and produced non-monotonic dose-response curves (NMDRCs) at higher ligand concentrations. The shapes of these NMDRCs were reminiscent of the phenomenon of squelching. Resource limitations for transcriptional machinery are becoming apparent in eukaryotic cells. Within single cells, nuclear receptor-mediated gene expression appears to be a stochastic process; however, intercellular communication and other aspects of tissue coordination may represent a compensatory process to maintain an organism's ability to respond on a phenotypic level to various stimuli within an inconstant environment.