The AHR is a ligand-activated transcription factor that mediates gene-environment interactions. Genome-wide expression profiling during differentiation of mouse ES cells into cardiomyocytes showed that AHR activation by 2,3,7,8-tetrachlorodibenzo-p-dioxin; Dioxin (TCDD), its prototypical ligand, disrupted the expression of multiple homeobox transcription factors and inhibited cardiomyocyte contractility. Here we treated ES cells with TCDD at daily differentiation intervals to investigate whether TCDD-induced loss of contractility had a developmental window of sensitivity. Surprisingly, contractility was an AHR-dependent TCDD target solely between differentiation days 0 and 3 during the period of panmesoderm development, when TCDD also disrupted expression of genes in the TGFβ/BMP2/4 and wingless-type MMTV integration site (WNT)signaling pathways, suppressed the secretion of bone morphogenetic protein (BMP4), WNT3a, and WNT5a and elevated the secretion of Activin A, as determined by ELISA of the secreted proteins in the culture medium. Supplementing the culture medium with BMP4, WNT3a, or WNT5a during the first 3 days of differentiation successfully countered TCDD-induced impairment of contractility, while anti-WNT3a, or anti-WNT5a antibodies or continuous Noggin (a BMP4 antagonist) or Activin A treatment inhibited the contractile phenotype. In Ahr+/+, but not in Ahr−/− ES cells, TCDD treatment significantly increased mitochondrial copy number, suggestive of mitochondrial stress and remodeling. Sustained AHR activation during ES cell differentiation appears to disrupt the expression of signals critical to the ontogeny of cardiac mesoderm and cause the loss of contractility in the resulting cardiomyocyte lineage.