To investigate the role of bronchiolar epithelial NF-κB activity in the development of inflammation and fibrogenesis in a murine model of asbestos inhalation, we used transgenic (Tg) mice expressing an IκBα mutant (IκBαsr) resistant to phosphorylation-induced degradation and targeted to bronchial epithelium using the CC10 promoter. Sham and chrysotile asbestos-exposed CC10-IκBαsr Tg+ and Tg- mice were examined for altered epithelial cell proliferation and differentiation, cytokine profiles, lung inflammation, and fibrogenesis at 3,9, and 40 days. KC, IL-6 and IL-1β were increased (p ≤ 0.05) in bronchoalveolar lavage fluid (BALF) from asbestos-exposed mice, but to a lesser extent (p ≤ 0.05) in Tg+ vs Tg- mice. Asbestos also caused increases in IL-4, MIP-1β, and MCP-1 in BALF that were more elevated (p ≤ 0.05) in Tg + mice at 9 days. Differential cell counts revealed eosinophils in BALF that increased (p ≤ 0.05) in Tg+ mice at 9 days, a time point corresponding with significantly increased numbers of bronchiolar epithelial cells staining positively for mucus production. At all time points, asbestos caused increased numbers of distal bronchiolar epithelial cells and peribronchiolar cells incorporating the proliferation marker, Ki-67. However, bronchiolar epithelial cell and interstitial cell labeling was diminished at 40 days (p ≤ 0.05) in Tg+ vs Tg- mice. Our findings demonstrate that airway epithelial NF-κB activity plays a role in orchestrating the inflammatory response as well as cell proliferation in response to asbestos. Copyright © 2007 by The American Association of Immunologists, Inc.