Normal subjects were exposed to an aerosol of Escherichia coli endotoxin. Carbon monoxide diffusion (Dco), spirometry, blood neutrophils, white blood cells, and platelets were determined at various times thereafter. A significant decrease in Dco and an increase in blood neutrophils was found, with a maximum effect 4 to 8 h after exposure. Exposure to distilled water caused a tendency for Dco to decrease and a significant increase in blood neutrophils. No effect on spirometry or body temperature was detected. It is suggested that the changes observed represent an inflammation at the alveolar level that appears at dose levels of endotoxin below those which cause bronchoconstriction and fever.