BACKGROUND: Alloimmune lung injury, characterized by perivascular lymphocytic inflammation, lymphocytic bronchiolitis (LB), and obliterative bronchiolitis (OB), causes substantial morbidity and mortality after lung transplantation and bone marrow transplantation (BMT), but little is known regarding its pathogenesis. We have developed and pursued the hypothesis that local activation of pulmonary innate immunity through toll-like receptor (TLR)-4 is critical to the development of posttransplant alloimmune lung injury. METHODS: We developed a fully major histocompatibility complex-mismatched murine BMT model without systemic graft-versus-host disease, and challenged mice with aerosolized lipopolysaccharide (LPS), a prototypic TLR4 agonist, to determine the effect upon pulmonary alloimmune lung injury. RESULTS: LPS-exposed allogeneic BMT recipient mice developed histological and biological features of LB and OB, which were not observed in non-LPS-exposed allogeneic controls or syngeneic LPS-exposed mice. LPS-induced lymphocytic lung inflammation was dependent upon intact TLR4 signaling in donor-derived hematopoietic cells but not recipient structural lung cells, demonstrating a distinct function for TLR4 on hematopoietic cells in mediating alloimmunity. CONCLUSIONS: We demonstrate a critical role for localized, environmentally induced innate immune activation in promoting alloimmune lung injury. Local inhibition of TLR4 signaling in pulmonary resident hematopoietic cells represents a novel and potentially important therapeutic target to prevent posttransplant rejection.