Gut bacteria metabolize tryptophan into indoles. Intestinal levels of the tryptophan metabolite indole-3-acetic acid are reduced in patients with alcohol-associated hepatitis. Supplementation of indole-3-acetic acid protects against ethanol-induced liver disease in mice. The aim of this study was to evaluate the effect of engineered bacteria producing indoles as Aryl-hydrocarbon receptor (Ahr) agonists. C57BL/6 mice were subjected to chronic-plus-binge ethanol feeding and orally given PBS, control Escherichia coli Nissle 1917 (EcN) or engineered EcN-Ahr. The effects of EcN and EcN-Ahr were also examined in mice lacking Ahr in interleukin 22 (Il22)-producing cells. Through the deletion of endogenous genes trpR and tnaA, coupled with overexpression of a feedback-resistant tryptophan biosynthesis operon, EcN-Ahr were engineered to overproduce tryptophan. Additional engineering allowed conversion of this tryptophan to indoles including indole-3-acetic acid and indole-3-lactic acid. EcN-Ahr ameliorated ethanol-induced liver disease in C57BL/6 mice. EcN-Ahr upregulated intestinal gene expression of Cyp1a1, Nrf2, Il22, Reg3b, and Reg3g, and increased Il22-expressing type 3 innate lymphoid cells. In addition, EcN-Ahr reduced translocation of bacteria to the liver. The beneficial effect of EcN-Ahr was abrogated in mice lacking Ahr expression in Il22-producing immune cells. Our findings indicate that tryptophan metabolites locally produced by engineered gut bacteria mitigate liver disease via Ahr-mediated activation in intestinal immune cells.