The nonciliated bronchiolar epithelial (Clara) cell of the mouse is highly susceptible to toxicants that undergo metabolic activation, presumably because this cell type has high levels of cytochrome P-450 monooxygenases. As a first step in further defining the role of Clara cells in pulmonary xenobiotic activation and detoxication, we have isolated Clara cells (75 to 80% purity) and characterized them morphologically and biochemically. The identity of Clara cells, confirmed by transmission electron microscopy, was based on several features, including abundant agranular endoplasmic reticulum, large mitochondria, and dense secretory granules. Immunocytochemistry of isolated mouse cells showed that the majority were positive with antibodies against three major components of the pulmonary cytochrome P-450 monooxygenase system, cytochrome P-450 isozymes 2 (IIB), 5 (IVB), and NADPH cytochrome P-450 reductase, purified from rabbit lung. The isolated cells also showed a positive reaction with an antibody against the cytochrome P-450 isozyme that is active in the stereoselective metabolism of naphthalene, cytochrome P-450 mN (mN). Immunocytochemistry using the antibody against cytochrome P-450 isozyme 6 (IA1), purified from rabbit lung, showed no reaction in the isolated cells. The presence of intact cytochrome P-450 protein was confirmed by sodium dodecyl sulfate polyacrylamide gel electrophoresis and Western blots of homogenates of isolated cell preparations. The N-demethylation of benzphetamine and epoxidation of naphthalene occurred at easily measurable rates in incubations of isolated Clara cells. In contrast, diols, quinones, and monohydroxylated benzo(a)pyrene metabolites, analyzed by high performance liquid chromatography, were undetectable in extracts of Clara cells incubated with 3H-labeled substrate.(ABSTRACT TRUNCATED AT 250 WORDS)