Clara cells, progenitors for bronchiolar epithelium, are also primary targets for metabolically activated pulmonary cytotoxicants and have an abundance of the cytochrome P-450 monooxygenases required for xenobiotic metabolism. To define the repair pattern after massive Clara cell injury, mice were treated with naphthalene, and lungs evaluated 1-14 days postinjury (DPI). Clara cells of terminal bronchioles were vacuolated and swollen 1 DPI, exfoliated 2 DPI, and resembled controls at 14 DPI. The volume fraction of vacuolated cells was highest 1 and 2 DPI and minimal at 5-7 DPI. The volume fraction of normal nonciliated cells decreased 40% at 1 DPI. Cell proliferation increased within epithelium and interstitium at 1 DPI, was maximal at 2 DPI, and at all other time points was similar to baseline levels. Expression of Clara cell differentiation markers was barely detectable in terminal bronchiolar epithelium at 1 and 2 DPI, clearly detectable at 4 DPI, and gradually returned to control levels at 5-14 DPI. We conclude that bronchiolar epithelial repair after naphthalene injury involves distinct phases of proliferation and differentiation, proliferation of cells that are not differentiated Clara cells, and interaction of multiple cell types including nontarget cells.