The mammalian aryl hydrocarbon receptor (AHR) mediates the toxic effects of dioxins and related compounds. Toxicological and genetic studies have shown that AHR regulates important development events and physiological functions. Interestingly, AHR homologs are found in most metazoans, and studies of AHR regulation and function in invertebrate model systems may provide insight to the ancient functions of AHR. In this thesis, I analyze the endogenous functions of the ahr-1 gene in the nematode Caenorhabditis elegans. ahr-1:GFP is expressed in a subset of neurons. ahr-1 regulates the development of diverse neuronal cell types, including the AVM and PLM touch receptor neurons and the SDQR interneuron. Dorsal migration of the SDQR neuron requires the normal functions of both ahr-1 and its transcription factor dimerization partner ahr-1. Further, I show that UNC-6/Netrin, SAX-3/Robo, and UNC-129/TGFbeta also have roles in this migration event. In the URXL and URXR neurons, the UNC-86 transcription factor promotes expression of ahr-1, and the AHR-1 transcriptional complex then activates the expression of certain cell type specific markers, including gcy-32:GFP and npr-1:GFP. These data show that the AHR-1 transcriptional complex acts in combination with other intrinsic and extracellular factors to direct the differentiation of distinct neuronal subtypes;In addition to its roles in neural development, ahr-1 also functions acutely to regulate a specific behavior: the aggregation of C. elegans on lawns of bacterial food. Loss-of-function mutations in ahr-1 or aha-1 suppress aggregation behavior in npr-1-deficient animals. Expression of ahr-1 in only 4 neurons, including URXR and URXL, restores aggregation behavior to ahr-1 mutant animals. Aggregation behavior can be restored to ahr-1-deficient animals by heat-shock induction of ahr-1 expression several hours after development of the URX neurons is normally complete. Mutants defective in ahr-1 or aha-1 express the gcy-32, gcy-34, and gcy-35 soluble guanylate cyclase (sGC) reporter genes at markedly reduced levels. These genes have been shown to have key roles in regulating aggregation behavior. Collectively, these data support a model in which the AHR-1:AHA-1 transcription complex regulates the expression of sGCs and other unidentified genes that act acutely in the URX neurons to promote aggregation behavior.