Lung is a target organ for the toxicity of inhalated compounds. The respiratory tract is frequently exposed to elevated concentrations of these compounds and become the primary target site for toxicity. Occupational, accidental or prolonged exposure to a great variety of chemicals may result in acute or delayed injury to cells of the respiratory tract. Nevertheless, lung has a significant capability of biotransforming such compounds with the aim of reducing its potential toxicity. In some instances, the biotransformation of a given compound can result in the generation of more reactive, and frequently more toxic, metabolites. Indeed, lung tissue is known to activate pro-carcinogens (i.e. polycyclic aromatic hydrocarbons or N-nitrosamines) into more reactive intermediates that easily form DNA adducts. Lungs express several enzymes involved in the metabolising of xenobiotics. Among them, cytochrome P450 enzymes are major players in the oxidative metabolism as well metabolic bioactivation of many organic toxicants, including pro-carcinogens. Xenobiotic-metabolising P450 enzymes are expressed in bronchial and bronchiolar epithelium, Clara cells, type II pneumocytes, and alveolar macrophages Individual CYP isoforms have different patterns of localisation within pulmonary tissue. With the aid of sensitive techniques (i.e. reverse transcriptase-polymerase chain reaction, RT-PCR) it has become possible to detect CYP1A1, CYP1B1, CYP2A6, CYP2B6, CYP2E1 and CYP3A5 mRNAs in lung cells. Less conclusive results have been obtained concerning CYP2Cs, CYP2D6 and CYP3A4. CYP3A5 protein appears to be widely present in all lung samples and is localised in the ciliated and mucous cells of the bronchial wall, bronchial glands, bronchiolar ciliated epithelium and in type I and type II alveolar epithelium. Lung cells also express Phase II enzymes such as epoxide hydrolase, UGT1A (glucuronyl transferase) and GST-P1 (glutathione S-transferase), which largely act as detoxifying enzymes. A key question concerning organ-specific chemical toxicity is whether the actual target has the capacity to activate (or efficiently inactivate) chemicals. Results of several studies indicate that the different xenobiotic-metabolising CYPs, present in the human lung and lung-derived cell lines, likely contribute to in situ activation of pulmonary toxins, among them, pro-carcinogens. Some CYPs, in particular CYP1A, are polymorphic and inducible. Interindividual differences in the expression of these CYPs may explain the different risk of developing lung toxicity (possibly cancer), by agents that require metabolic activation. Few cell lines, principally A549, have been used with variable success as an experimental model for investigating the mechanisms of toxicity. Although RT-PCR analysis has evidenced the presence of the major human pulmonary CYP mRNAs, the measurable P450 specific activities are, however, far below those present in human lungs. Detection of the toxicity elicited by reactive metabolites requires the use of metabolically competent cells; consequently, better performing cells are needed to ensure realistic in vitro prediction of toxicity. Genetic manipulation of lung-derived cells allowing them to re-express key biotransformation enzymes appear to be a promising strategy to improve their functionality and metabolic performance.