Ferrate (Fe(VI)) is an environmentally friendly disinfectant that is widely used to eradicate microbes in reclaimed water. However, the potential health risks associated with inhalation of Fe(VI)-treated bacteria-laden reclaimed water remains uncertain. We aimed to explore the inhalation hazards and potential mechanisms of K2FeO4-treated Escherichia coli (E. coli, ATCC 25922). Our findings indicated that Fe(VI) disinfection induced a dose- and time-dependent E. coli inactivation, accompanied by a rapid release of the bacterial endotoxin, lipopolysaccharide (LPS). Scanning electron microscopy (SEM) observations indicate that Fe(VI)-induced endotoxin production consists of at least two stages: initial binding of endotoxin to bacteria and subsequent dissociation to release free endotoxin. Furthermore, Fe(VI) disinfection was not able to effectively eliminate pure or E. coli-derived endotoxins. The E. coli strain used in this study lacks lung infection capability, thus the inhalation of bacteria alone failed to induce severe lung injury. However, mice inhaled exposure to Fe(VI)-treated E. coli showed severe impairment of lung structure and function. Moreover, we observed an accumulation of neutrophil/macrophage recruitment, cell apoptosis, and ROS generation in the lung tissue of mice subjected to Fe(VI)-treated E. coli. RNA sequencing (RNA-seq) and PCR results revealed that genes involved with endotoxin stimuli, cell apoptosis, antioxidant defence, inflammation response, chemokines and their receptors were upregulated in response to Fe(VI)-treated E. coli. In conclusion, Fe(VI) is ineffective in eliminating endotoxins and can trigger secondary hazards owing to endotoxin release from inactivated bacteria. Aerosol exposure to Fe(VI)-treated E. coli causes considerable damage to lung tissue by inducing oxidative stress and inflammatory responses.