The present manuscript describes the development of a cell-based reporter transcriptional activation assay for evaluating induction of UGT1A1. A reporter construct (pGL-UGT1A1-Luc) encompassing the proximal promoter (nucleotide -254 to +38) and distal enhancer (-3483 to – 3194) regions of the human UGT1A1 gene was generated by PCR cloning, and co-transfected with a previously generated PXR construct (pSG5-PXR) into HepG2 cells. The system was then validated using known ligands of PXR, rifampicin (RIF), clotrimazole (CLOT) sulfinpyrazone (SPZ) and phenobarbital (PB), which produced dose dependent induction of UGT1A1 luciferase activity by 4.4, 5.3, 4.7 and 3.7 fold, respectively, relative to the vehicle control, 0.1 % dimethylsulfoxide (DMSO). Aryl hydrocarbon receptor (AhR) ligands α- naphthoflavone (α-Naph), β-naphthoflavone (β-Naph) and 3-methylchloranthene (3-MC) increased UGT1A1 luciferase activity in a concentration dependent manner resulting in 17.2, 11.3 and 6.1 fold, respectively, at their highest concentrations, suggesting that endogenous AhR is also involved in the regulation of the UGT1A1 reporter construct in HepG2 cells. For comparison with transcriptional regulation of endogenous UGT1A1, 10 μM RIF, 50 μM SPZ, 10 μM CLOT, 4 μM 3-MC, 10 μM β-Naph and 25 μM α-Naph also induced UGT1A1 mRNA in human primary hepatocytes by 2.5, 2.8, 3.2, 3.7, 3.9 and 4.3 fold, respectively. In summary, by co-transfecting the UGT1A1 reporter and PXR constructs into HepG2 cells, we have developed a cellular model for evaluating induction of UGT1A1. Data from the reporter gene assay correlated with that generated in human primary hepatocytes. Based on these data, we suggest that this reporter gene assay can be used as a screening tool in the early stages of drug discovery, to evaluate potential induction of UGT1A1 by new chemical entities and to aid in lead selection and optimization.