The adenoviral E3-14.7K protein is a cytoplasmic protein synthesized after adenoviral infection. To assess the contribution of E3-14.7K-sensitive pathways in the modulation of inflammation by the respiratory epithelium, inflammatory responses to intratracheal lipopolysaccharide (LPS) and tumor necrosis factor (TNF)-α were assessed in transgenic mice bearing the adenoviral E3-14.7K gene under the direction of the surfactant protein (SP) C promoter. When E3-14.7K transgenic mice were administered LPS intratracheally, lung inflammation as indicated by macrophage and neutrophil accumulation in bronchoalveolar lavage fluid was decreased compared with wild-type control mice. Lung inflammation and epithelial cell injury were decreased in E3-14.7K mice 24 and 48 h after LPS administration. Intracellular staining for surfactant proprotein (proSP) B, proSP-C, and SP-B was decreased and extracellular staining was markedly increased in wild-type mice after LPS administration, consistent with LPS-induced lung injury. In contrast, intense intracellular staining of proSP-B, proSP-C, and SP-B persisted in type II cells of E3-14.7K mice, whereas extracellular staining of proSP-B and proSP-C was absent. Inhibitory effects of intratracheal LPS on SP-C mRNA were ameliorated by expression of the E3-14.7K gene. Similar to the response to LPS, lung inflammation after intratracheal administration of TNF- α was decreased in E3-14.7K transgenic mice. Levels of TNF-α after LPS administration were similar in wild-type and E3-14.7K-bearing mice. Cell- selective expression of E314.7K in the respiratory epithelium inhibited LPS- and TNF-α-mediated lung inflammation, demonstrating the critical role of respiratory epithelial cells in LPS- and TNF-α-induced lung inflammation.