Dioxins are potent mammalian carcinogens and toxins affecting liver, skin, and immune and reproductive systems. The intracellular Ah receptor, a ligand-dependent transcription factor of the basic region/helix-loop-helix/Per-Ahr/Arnt-Sim homology domain (bHLH-PAS) protein family, mediates responses to dioxins. Target genes of the Ah receptor that mediate dioxin toxicity and carcinogenicity are, however, mostly unknown. We used 5L rat hepatoma cells to identify dioxin-inducible genes by suppression subtractive hybridization. Eleven cDNA fragments were identified that represented novel sequences or genes for which induction by dioxins had not been known. N-myristoyltransferase 2 (NMT2) is one of the later dioxin-inducible genes. Induction of NMT2 was confirmed in livers of mice in vivo. NMT2 induction was a direct consequence of Ah receptor activation in 5L cells. [(3)H]myristic acid incorporation into 5L cell proteins was inducible by dioxins, indicating that protein myristoylation is a regulated rather than a housekeeping function and that NMT activity is limiting in noninduced 5L cells. Here we show for the first time that expression of NMT2 and induced protein myristoyltransferase activity are direct responses to carcinogen exposure. Because inappropriate protein NH(2)-terminal myristoylation appears to play a role in carcinogenesis, induction of NMT2 may play a central role in dioxin carcinogenicity.