This research was undertaken to study the kinetics of Type 2 cell division and the fate of the Type 2 sister cell following exposure to NO(2). To accomplish this, male rats were exposed to NO(2). Dividing cells were labeled with (3)H-TdR and studied with autoradiographic technics in the light and electron microscopes for up to 72 hours after labeling. The kinetics of cell division were determined from a curve constructed from the percent of labeled mitotic figures. The fate of the Type 2 sister cells was determined by studying tissues at 24, 48 and 72 hours after labeling with (3)H-TdR. The results show that Type 2 cells may divide and the sister cells transform into Type 1 cells. These data support an interpretation of the mechanism for cell renewal of the alveolar epithelium in which Type 2 cells are the progenitor cells for Type 1 cells.