The aryl hydrocarbon receptor (AhR) plays a crucial role in regulating many physiological processes. Activating the AhR–CYP1A1 axis has emerged as a novel therapeutic strategy against various inflammatory diseases. Here, a practical in situ cell-based fluorometric assay was constructed to screen AhR-CYP1A1 axis modulators, via functional sensing of CYP1A1 activities in live cells. Firstly, a cell-permeable, isoform-specific enzyme-activable fluorogenic substrate for CYP1A1 was rationally constructed for in-situ visualizing the dynamic changes of CYP1A1 function in living systems, which was subsequently used for discovering the efficacious modulators of the AhR–CYP1A1 axis. Following screening of a compound library, LAC-7 was identified as an efficacious activator of the AhR–CYP1A1 axis, which dose-dependently up-regulated the expression levels of both CYP1A1 and AhR in multiple cell lines. LAC-7 also suppressed macrophage M1 polarization and reduced the levels of inflammatory factors in LPS-induced bone marrow-derived macrophages. Animal tests showed that LAC-7 could significantly mitigate DSS-induced ulcerative colitis and LPS-induced acute lung injury in mice, and markedly reduced the levels of multiple inflammatory factors. Collectively, an optimized fluorometric cell-based assay was devised for in situ functional imaging of CYP1A1 activities in living systems, which strongly facilitated the discovery of efficacious modulators of the AhR–CYP1A1 axis as novel anti-inflammatory agents.