The AHR is an environmental sensor and transcription factor activated by a variety of man-made and natural ligands, which has recently emerged as a critical regulator of homeostasis at barrier organs such as the skin. Activation of the AHR pathway downmodulates skin inflammatory responses in animal models and psoriasis clinical samples. In this study, we identify CYP1A1 enzymatic activity as a critical regulator of beneficial AHR signaling in the context of skin inflammation. Mice constitutively expressing Cyp1a1 displayed increased CYP1A1 enzymatic activity in the skin, which resulted in exacerbated immune cell activation and skin pathology, mirroring that observed in Ahr-deficient mice. Inhibition of CYP1A1 enzymatic activity ameliorated the skin immunopathology by restoring beneficial AHR signaling. Importantly, patients with psoriasis displayed reduced activation of the AHR pathway and increased CYP1A1 enzymatic activity compared with healthy donors, suggesting that dysregulation of the AHR/CYP1A1 axis may play a role in inflammatory skin disease. Thus, modulation of CYP1A1 activity may represent a promising alternative strategy to harness the anti-inflammatory effect exerted by activation of the AHR pathway in the skin.