Diphenylarsinic acid (DPAA), a chemical warfare-related neurotoxic organic arsenical, is present in the groundwater and soil in some regions of Japan due to illegal dumping after World War II. Inorganic arsenic is carcinogenic in humans and its organic arsenic metabolites are carcinogenic in animal studies, raising serious concerns about the carcinogenicity of DPAA. However, the carcinogenic potential of DPAA has not yet been evaluated. In the present study we found that DPAA significantly enhanced the development of diethylnitrosamine-induced preneoplastic lesions in the liver in a medium-term rat liver carcinogenesis assay. Evaluation of the expression of cytochrome P450 (CYP) enzymes in the liver revealed that DPAA induced the expression of CYP1B1, but not any other CYP1, CYP2, or CYP3 enzymes, suggesting that CYP1B1 might be the enzyme responsible for the metabolic activation of DPAA. We also found increased oxidative DNA damage, possibly due to elevated CYP1B1 expression. Induction of CYP1B1 has generally been linked with the activation of AhR, and we found that DPAA activates the aryl hydrocarbon receptor (AhR). Importantly, the promotion effect of DPAA was observed only at a dose that activated the AhR, suggesting that activation of AhR and consequent induction of AhR target genes and oxidative DNA damage plays a vital role in the promotion effects of DPAA. The present study provides, for the first time, evidence regarding the carcinogenicity of DPAA and indicates the necessity of comprehensive evaluation of its carcinogenic potential using long-term carcinogenicity studies.