The ligand-activated transcription factor aryl hydrocarbon receptor (AHR) participates in the differentiation of FoxP3(+) T(reg), Tr1 cells, and IL-17-producing T cells (Th17). Most of our understanding on the role of AHR on the FoxP3(+) T(reg) compartment results from studies using the toxic synthetic chemical 2,3,7,8-tetrachlorodibenzo-p-dioxin. Thus, the physiological relevance of AHR signaling on FoxP3(+) T(reg) in vivo is unclear. We studied mice that carry a GFP reporter in the endogenous foxp3 locus and a mutated AHR protein with reduced affinity for its ligands, and found that AHR signaling participates in the differentiation of FoxP3(+) T(reg) in vivo. Moreover, we found that treatment with the endogenous AHR ligand 2-(1'H-indole-3'-carbonyl)-thiazole-4-carboxylic acid methyl ester (ITE) given parenterally or orally induces FoxP3(+) T(reg) that suppress experimental autoimmune encephalomyelitis. ITE acts not only on T cells, but also directly on dendritic cells to induce tolerogenic dendritic cells that support FoxP3(+) T(reg) differentiation in a retinoic acid-dependent manner. Thus, our work demonstrates that the endogenous AHR ligand ITE promotes the induction of active immunologic tolerance by direct effects on dendritic and T cells, and identifies nontoxic endogenous AHR ligands as potential unique compounds for the treatment of autoimmune disorders.