Tapinarof (GSK2894512) is a naturally derived topical treatment with demonstrated efficacy for patients with psoriasis and atopic dermatitis, although the biologic target and mechanism of action had been unknown. We demonstrate that the anti-inflammatory properties of tapinarof are mediated through activation of the aryl hydrocarbon receptor (AhR). We show that tapinarof binds and activates AhR in multiple cell types, including cells of the target tissue—human skin. In addition, tapinarof moderates proinflammatory cytokine expression in stimulated peripheral blood CD4+ T cells and ex vivo human skin, and impacts barrier gene expression in primary human keratinocytes; both of these processes are likely to be downstream of AhR activation based on current evidence. That the anti-inflammatory properties of tapinarof derive from AhR agonism is conclusively demonstrated using the mouse model of imiquimod-induced psoriasiform skin lesions. Topical treatment of AhR-sufficient mice with tapinarof leads to compound-driven reductions in erythema, epidermal thickening, and tissue cytokine levels. In contrast, tapinarof has no impact on imiquimod-induced skin inflammation in AhR-deficient mice. In summary, these studies identify tapinarof as an AhR agonist and confirm that its efficacy is dependent on AhR.