Keratinocyte growth factor (KGF) has recently been shown to protect rats from hyperoxia-induced lung injury. However, the mechanism of the protective effect of KGF remains unclear. To elucidate the mechanism of action of KGF, we determined the effect of KGF on the barrier function of epithelial monolayers exposed to H(2)O(2). Calu-3 (human airway epithelial cells) were grown on Transwell membranes, and the permeability to fluorescein isothiocyanate-albumin was measured. Exposure to 0.5 mM H(2)O(2) significantly increased permeability from 1.50 +/- 0.09 to 24.8 +/- 1.5 (mean +/- SE x 10(-6) cm/s; P < 0.001). Incubation of monolayers with 50 ng/ml KGF for 24 h significantly reduced basal albumin flux (0.85 +/- 0.09; P < 0.001), and pretreatment with KGF completely abolished the H(2)O(2)-induced permeability increase (1.08 +/- 0.09). The protective effect of KGF was dose dependent and was observed at concentrations as low as 1 ng/ml. Partial amelioration of the H(2)O(2)-induced permeability increase occurred after 1 h of exposure to KGF. Treatment of cells with calphostin C, an inhibitor of protein kinase C (PKC), had no effect on the permeability of control or H(2)O(2)-treated cells. Calphostin C abolished both the KGF-mediated decrease in basal albumin flux and the protective effect of KGF against H(2)O(2)-induced increases in permeability. KGF pretreatment also prevented H(2)O(2)-induced disruption of F-actin staining patterns, suggesting stabilization of the cytoskeleton. These studies demonstrate that KGF decreases albumin flux across airway epithelial monolayers and prevents H(2)O(2)-induced increases in permeability by a PKC-dependent process that may involve stabilization of the cytoskeleton.