Rabbits were exposed to 100% oxygen or to air at one atmosphere. No alterations were observed in the lung of rabbits breathing air for up to 66 hours or 100% oxygen for 24 hours; after 48 hours, inflammatory cells, chiefly neutrophils, were located in the interstitium of the lung. By 66 hours of oxygen, the number of inflammatory cells in the interstitial space was greater than at 48 hours. At 72 hours, alveolar space in focal areas of the lung was filled with edema fluid containing a lightly flocculent material, and more densely staining fibrin. In experiments for the study of alveolar permeability, cytochrome C was instilled through the tracheobronchial tree into alveoli and demonstrated ultracytochemically by its peroxidase activity. No electron-opaque reaction product was observed in control rabbits or in those breathing oxygen for 24 hours, indicating that the tracer did not leave the alveolar space. However, after 48 hours of the breathing of 100% oxygen, electron-opaque reaction product was localized to the basal lamina of alveolar capillaries in focal areas, whereas in other alveolar capillaries there was no reaction product in the basal lamina. Vesicles filled with reaction product were observed in Type 1 pneumocytes and in alveolar capillary endothelial cells within capillary loops having increased electron density in the basal lamina. After 66 hours of the breathing of 100% oxygen, virtually all alveolar capillaries showed electron-opaque reaction product in the basal lamina and in vesicles within Type 1 cells and capillary endothelial cells. Increased permeability of Type 1 pneumocytes appears as an early manifestation of oxygen-induced changes in the lung preceding pulmonary edema. The presence of numerous inflammatory cells in the interstitium and in alveolar capillaries may play some part in the pathogenesis of the oxygen-induced increase in alveolar permeability.