Although many functions of human alveolar macrophages are altered compared with their precursor cell, the blood monocyte (monocyte), the reason(s) for these functional changes have not been determined. We recently reported that human alveolar macrophages do not express AP-1 DNA binding activity (Monick, M. M., Carter, A. B., Gudmundsson, G., Geist, L. J., and Hunninghake, G. W. (1998) Am. J. Physiol. 275, L389-L397). To determine why alveolar macrophages do not express AP-1 DNA binding activity, we first showed that there was not a decrease in expression of the FOS and JUN proteins that make up the AP-1 complex. There was, however, a significant difference in the amounts of the nuclear protein, REF-1 (which regulates AP- 1 DNA binding by altering the redox status of FOS and JUN proteins), in alveolar macrophages compared with monocytes. In addition, in vitro differentiation of monocytes to a macrophage-like cell resulted in decreased amounts of REF-1. Finally, addition of REF-1 from activated monocytes to alveolar macrophage nuclear proteins resulted in a marked increase in AP-1 DNA binding. These studies strongly suggest that the process of differentiation of monocytes into alveolar macrophages is associated with a loss of REF-1 and AP-1 activity. This observation may explain, in part, some of the functional differences observed for alveolar macrophages compared with monocytes.