Monocytic cells are integral in the pathogenesis of inflammatory disorders. We have shown previously that asbestos-induced p38 mitogen-activated protein (MAP) kinase activation and TNF-α expression are mediated by H 2O2 in blood monocytes. Due to the high expression and activity of catalase and glutathione peroxidase, normal alveolar macrophages do not respond in a manner similar to that of blood monocytes. Since kinase activity is tightly regulated by phosphatases, we hypothesized that the dual specificity phosphatase MAP kinase phosphatase (MKP)-1 regulates p38 activity and TNF-α production in alveolar macrophages due to insufficient H 2O2 generation in response to asbestos. We found that MKP-1 was highly expressed in alveolar macrophages, while blood monocytes had minimal expression. Inhibition of expression and activity of MKP-1 or overexpression of a catalytic mutant MKP-1 recovered p38 activity in alveolar macrophages. We questioned whether MKP-1 oxidation played a role dictating the contrasting responses of these cells to asbestos exposure, and found that overexpressed wild-type MKP-1 in monocytes was oxidized, while the mutant MKP-1 remained in the reduced form. Monocytes overexpressing either catalase or wild-type MKP-1 had decreased p38 activation and TNF-α production, respectively. In addition, TNF-α gene expression was regained in alveolar macrophages overexpressing the catalytic mutant MKP-1. These data suggest that MKP-1, through increased expression and lack of oxidation, modulates the inflammatory response in alveolar macrophages exposed to asbestos.