Indigo Naturalis, also known as Qing Dai (QD) is a compound obtained from Indigofera tinctoria, Isatis tinctoria, and Polygonum tinctoria and is known to ameliorate refractory ulcerative colitis (UC) by an unknown mechanism. QD maintains both homeostasis and the integrity of colon epithelia in mice that have experimentally induced colitis. The primary component of QD, indigo, comprises 42.4% of the compound. Indigo efficiently suppresses rectal bleeding and reduces the erosion of the colon epithelium, whereas it does not reduce weight loss or increase survival in a certain condition. Indigo is a ligand of the aryl hydrocarbon receptor (AhR), which is involved in the anti-colitis activity of QD. Here we investigate the effects of indigo on wound (erosion) closure in colon epithelial cells. Oral administration of indigo induced expression of Cytochrome P450 1A1 (Cyp1a1) in the colon but not in the liver, suggesting that indigo stimulates AhR from the luminal side of the colon. The erosion-closure activity tested in the scratch assays using Caco-2 cells was accelerated by addition of QD and indigo to the culture medium. QD and indigo also induced nuclear localization of AhR and expression of CYP1A1 in the Caco-2 cells. Acceleration of scratch wound closure was abolished by addition of the AhR-antagonist CH223191. Cell proliferation and actin polymerization were also shown to contribute to erosion closure. The results suggest that indigo exerts its erosion-healing effects by increasing proliferation and migration of colon epithelial cells via activation of AhR in intestinal epithelia.