ABSTRACT: Acute Respiratory Distress Syndrome (ARDS) is a severe inflammatory lung disorder triggered by pneumonia, sepsis, trauma, and COVID-19, leading to high mortality. In this study, we investigated the effect of Aryl Hydrocarbon Receptor (AhR) activation by 2,3,7,8-tetrachlorodibenzo-p-dioxin (TCDD), a potent ligand, on LPS-induced ARDS in mice using single-cell RNA sequencing (scRNA-seq). scRNA-seq revealed sixteen transcriptionally distinct cell clusters in the lungs. AhR activation reversed the decreased pulmonary functions caused by LPS, and significantly reduced pulmonary infiltration of monocytes, neutrophils, and macrophages. Interestingly, AhR activation during ARDS led to increased proportions of alveolar macrophages, and angiogenic and quiescent endothelial cells (AECs and QECs, respectively). Among the downregulated pathways, prostaglandin signaling was the most broadly suppressed across many cell types in the LPS+TCDD group. AhR activation suppressed the neutrophil chemotaxis pathway involving Cxcl2, Cxcl3, and Cxcl10. The damage to endothelial and epithelial cells induced during ARDS was also blocked by AhR activation. This was associated with decreased expression of S100a8 and S100a9. Notably, multiple pathways related to cellular junction organization were enriched following AhR activation. Additionally, Scgb1a1, also called Club cell protein 16 (CC16), primarily secreted by Club cells in the respiratory epithelium, was highly upregulated following AhR activation accounting for lung homeostasis. Together, these findings demonstrate that AhR activation mitigates key inflammatory and barrier-disruptive processes involving multiple cell types in LPS-induced ARDS. These data identify AhR as a central regulator of pulmonary inflammation and epithelial–endothelial integrity and support the future evaluation of AhR-targeted therapeutics as potential treatment for ARDS.