Endotoxin from Enterobacter agglomerans has no effect upon the electrophysiologic or ion transport properties of the canine tracheal epithelium mounted in Ussing chambers. Since endotoxin has been implicated in the pathophysiology of byssinosis, and since alveolar macrophages have been shown to release mediators in response to endotoxin, we investigated the effect of supernates from (E. agglomerans) endotoxin-exposed rabbit alveolar macrophages on the electrophysiologic and ion transport properties of the canine tracheal epithelium. Endotoxin-induced mediator release as measured by an increase in short-circuit current (Isc) and an increase in net chloride secretion was observed. Alveolar macrophages incubated in endotoxin-free solutions also produced an increase in Isc, but the increase was less than the increase in endotoxin-exposed solutions and there was no effect on net chloride secretion. The effect was observed after a 90 minute incubation period and was observed at endotoxin concentrations as low as lµg/ml. The effect was not dose-dependent at higher endotoxin concentrations. After a 24 hour incubation period, there was no difference in the effect on Isc and net chloride secretion between the control (endotoxin -free) and endotoxin-exposed supernates. These observations suggest that endotoxin is capable of causing mediator release from alveolar macrophages and that these mediators are released in sufficient amounts to have effects upon the electrophysiologic and ion transport properties of the airway epithelium.