BCNU, a potent alkylating antitumor agent, causes a severe pulmonary injury in patients treated with high doses of the drug. We have described a multi-dosing animal model to study the mechanism of BCNU-induced pulmonary toxicity. After 2 doses of BCNU (10 mg/kg cumulative dose), electron microscopic studies have shown changes in pulmonary Type II cells which are associated with cell toxicity and disturbed surfactant synthesis. Alveolar Type II cells are responsible for surfactant production and have a very active lipid biosynthesis system. Therefore, fatty acid synthesis was measured as a marker for pulmonary Type II cell injury after BCNU administration. Single doses of BCNU caused a dose- and time-dependent decrease in fatty acid synthesis rates measured in lung tissue. A maximum of 48% of C14-acetate incorporation into fatty acids occurred 24 hours after a dose of 120 mg BCNU/kg. This depression in fatty acid synthesis lasted up to 48 hours after a single dose of BCNU. The multi-dosing model for BCNU-induced pulmonary fibrosis also resulted in a marked alteration of pulmonary fatty acid synthesis rates. After 6 doses of BCNU (cumulative dose 30 mg/kg) fatty acid synthesis was depressed by 64%. This inhibition was organ-specific, renal rats of C14-acetate incorporation into fatty acids did not change after 6 doses of BCNU when maximal changes in lung tissue occurred. This correlated with an absence of kidney damage measured by organic ion accumulation or lustology. Rates of fatty acid synthesis appear to be a good biochemical marker for pulmonary alveloar Type II cell injury produced by BCNU. Freshly isolated rat pulmonary Type II cells are sensitive to BCNU in vitro. Incubation of confluent cultures of Type II cells with BCNU resulted in a depression of cellular gluthathione. These alterations of the Type II cells antioxidant defense mechanism occurred with evidence of cell injury, but no cell death. This indicates, perhaps an additional oxidant challengs is necessary to produce overt cell death.