In mouse hepatoma cells, the environmental contaminant 2,3,7,8-tetrachlorodibenzo-p-dioxin (TCDD, or dioxin) induces Cyp1A1 gene transcription, a process that requires two basic helix-loop-helix regulatory proteins, the aromatic hydrocarbon receptor (AhR) and the aromatic hydrocarbon receptor nuclear translocator (Arnt). We have used a ligation-mediated PCR technique to analyze dioxin-induced changes in protein-DNA interactions and chromatin structure of the Cyp1A1 enhancer-promoter in its native chromosomal setting. Dioxin-induced binding of the AhR/Arnt heteromer to enhancer chromatin is associated with a localized (about 200 bp) alteration in chromatin structure that is manifested by increased accessibility of the DNA; these changes probably reflect direct disruption of a nucleosome by AhR/Arnt. Dioxin induces analogous AhR/Arnt-dependent changes in chromatin structure and accessibility at the Cyp1A1 promoter. However, the changes at the promoter must occur by a different, more indirect mechanism, because they are induced from a distance and do not reflect a local effect of AhR/Arnt binding. Dose-response experiments indicate that the changes in chromatin structure at the enhancer and promoter are graded and mirror the graded induction of Cyp1A1 transcription by dioxin. We discuss these results in terms of a TCDD-induced shift in an equilibrium between nucleosomal and nonnucleosomal chromatin configurations.