Inhalation of ozone (5 ppm for three hours) by rabbits resulted in morphologic alterations in the pulmonary alveolar macrophages recovered from the lungs of exposed animals. These structural alterations were characteristic of cellular injury or cell death and included intracellular vacuolization, dilatation of the endoplasmic reticulum and perinuclear envelope, swelling of mitochondria, cell lysis, and formation of myelin figures and autophagic vacuoles. Exposure to ozone had no significant effect on pulmonary surface activity, phosphatide composition, or fatty acid composition of phospholipids recovered from extracts of whole lung or by bronchioalveolar lavage from exposed animals. A dose-related functional impairment in alveolar macrophage intrapulmonary antibacterial defense mechanisms resulted from exposure to lower levels of ozone. Similar dose-related impairments in macrophage function were induced with prolonged oxygen administration.