Basement membrane degradation can be indicative of tissue injury, but the process may also release matrix-bound cytokines to stimulate cell regeneration. To investigate this process, acute lung injury was induced in rats by intratracheal bleomycin and animals were killed from 3 days to 8 weeks later. The lungs were lavaged with saline to collect bronchoalveolar lavage (BAL) fluid and cell proliferation was assessed by pulse incorporation of tritiated thymidine. Bleomycin induced rapid inflammation with increased cell numbers and protein levels in BAL. Collagen degradation products were also increased in BAL fluid from 3 days to 4 weeks. Incubating samples of BAL fluid with radiolabelled collagens I and IV showed that high levels of activity, particularly for the degradation of type IV collagen, were present as early as 3 days post-bleomycin and persisted over the 8-week period. Zymograms demonstrated the highest level of gelatinase A (MMP-2) activity in BAL fluid in the first 2 weeks after bleomycin. Coincident with peak basement membrane degradative activity was the onset of a phase of epithelial cell proliferation, as measured by labelled nuclei in autoradiographs. The results show that enzymes capable of degrading the alveolar basement membrane are secreted early in the lung injury phase and that their presence in BAL fluid can be used as a measure of alveolar wall damage. It is possible that this enzyme action may release bound cytokines from the basement membrane, since maximal gelatinase activity correlates with alveolar epithelial cell proliferation.