Severe damage to the alveolar type I epithelial cell is a characteristic morphological feature of lung injury due to numerous causes. It is postulated that excess phospholipase A2 (PLA2) activity might be responsible for these changes, as one of the naturally occurring products of this enzyme, lysophosphatidylcholine (lysoPC) has been shown to cause selective injury to the type I pneumonocyte when it is instilled into the lower air spaces of the lung. To further investigate this potential mechanism of type I epithelial cell toxicity, we have measured the epithelial permeability-surface area product (PS) for [14C]sucrose as well as whole-lung lysoPC content at several times after instilling PLA2 (Naja naja venom) into either the air spaces or the perfusate of an isolated hamster lung preparation. As a molar percentage of total phospholipids, the normal hamster lung contains ~1.5% lysoPC, and this value is not affected by fluid filling of the air spaces or perfusion of the excised lung for periods up to 90 min. When 0.15 U/ml PLA2 is instilled into the air spaces, lung lysoPC content increases to ~2.5% and there are barely detectable increases in [14C]sucrose PS. With air space PLA2 concentrations of 0.30 U/ml, lysoPC content increases to between 4 and 5%, [14C]sucrose PS increases by greater than a factor of 10, and flooding of the alveolar spaces occurs. Ultrastructural studies of similarly treated lungs show widespread but selective damage to the type I epithelial cells. These same biochemical and functional changes are not seen when the same concentrations of PLA2 are added to the lung perfusate. Analyses of the fatty acyl substituents of the lysoPC generated after lung exposure to PLA2, as well as studies of the phospholipid composition of bronchoalveolar lavage fluid exposed to PLA2 in vitro, suggest that the dipalmitoyl phosphatidylcholine contained within the surfactant material serves as a preferred substrate for this form of the enzyme. The lysoPC generated in this reaction is presumed to be an important proximal mediator of injury to the type I epithelial cells.