Myeloperoxidase (MPO)-derived oxidants participate in the respiratory antimicrobial defense system but are also implicated in oxidant-mediated acute lung injury. We hypothesized that MPO contributes to lung injury commonly observed after bone marrow transplantation (BMT). MPO-sufficient (MPO+/+) and -deficient (MPO-/-) mice were given cyclophosphamide and lethally irradiated followed by infusion of inflammation-inducing donor spleen T cells at time of BMT. Despite suppressed generation of nitrative stress, MPO-/- recipient mice unexpectedly exhibited accelerated weight loss and increased markers of lung dysfunction compared with MPO+/+ mice. The increased lung injury during MPO deficiency was a result of donor T cell-dependent inflammatory responses because bronchoalveolar lavage fluids (BALF) from MPO-/- mice contained increased numbers of inflammatory cells and higher levels of the proinflammatory cytokine TNF-alpha and the monocyte chemoattractant protein-1 compared with wild-type mice. Enhanced inflammation in MPO-/- mice was associated with suppressed apoptosis of BALF inflammatory cells. The inflammatory process in MPO-/- recipients was also associated with enhanced necrosis of freshly isolated alveolar type II cells, critical for preventing capillary leak. We conclude that suppressed MPO-derived oxidative/nitrative stress is associated with enhanced lung inflammation and persistent alveolar epithelial injury.