Macrophages play an essential role in the innate immune system by differentiating into functionally diverse subsets in order to fight infection, repair damaged tissues, and regulate inappropriate immune responses. This functional diversity stems from their ability to adapt and respond to signals in the environment, which is in part mediated through aryl hydrocarbon receptor (AHR)-signaling. AHR, an environmental sensor, can be activated by various ligands, ranging from environmental contaminants to microbially derived tryptophan metabolites. This review discusses what is currently known about how AHR-signaling influences macrophage differentiation, polarization, and function. By discussing studies that are both consistent and divergent, our goal is to highlight the need for future research on the mechanisms by which AHR acts as an immunological switch in macrophages. Ultimately, understanding the contexts in which AHR-signaling promotes and/or inhibits differentiation, proinflammatory functions, and immunoregulatory functions, will help uncover functional predictions of immunotoxicity following exposure to environmental chemicals as well as better design AHR-targeted immunotherapies.