Inhalation of nitrogen dioxide (NO 2) produces injury to the epithelium of terminal airways and the alveoli proximal to the airways. Techniques were devised to isolate alveolar tissue from this region for morphometric studies to define the extent of alveolar septal injury caused by NO 2. One-day-old and six-week-old rats were exposed to either room air or 0.5 ppm NO 2 for 23 hr per day 7 days per week for 6 weeks. An additional group 6-week-old rats were exposed to 2.0 ppm NO 2 for the same duration. Two daily hour spikes to three times the background concentrations (0.5 to 1.5 ppm and 2.0 to 6.0 ppm) were applied Monday through Friday. At the end of the exposure, rat lungs were fixed by intratracheally infusing buffered 2% glutaraldehyde. Pieces of lung tissue were embedded in large plastic blocks which were softened with heat and thin (0.3 mm) sliced. Terminal bronchioles and their corresponding proximal alveolar regions were identified from the thin plastic slices, removed, and glued to cylindrical EM blocks for thin sectioning. Morphometric analysis revealed that epithelial injury occurred in all exposed animals. The juvenile rats which had been exposed to 0.5 ppm NO 2 since 1 day of age exhibited changes in the characteristics of type II epithelial cells. These cells spread to cover more alveolar surface and became thinner. Adult animals exposed to 0.5 and 2.0 ppm NO 2 showed changes in alveolar macrophages and in the alveolar interstitium in addition to changes in the epithelium. Animals exposed to 0.5 ppm NO 2 showed spreading and hypertrophy of type II epithelial cells. Those animals exposed to the higher concentration of NO 2 had similar changes in type II epithelial cells and in addition showed an increase in type I cell number. The type I epithelial cells were smaller and covered less alveolar surface area than normal type I cells, suggesting a regenrating population of type I cells. These results suggest that prolonged exposure to low concentrations of NO 2 can cause injury to the alveolar epithelium indicated initially by spreading and hypertrophy of type II cells followed by differentiation into type I cells to compensate and repair the injury. Adult rats were as sensitive or more sensitive to NO 2 injury than were juvenile rats.