ABCG1, a member of the ATP-binding cassette transporter superfamily, is highly expressed in multiple cells of the lung. Loss of ABCG1 results in severe pulmonary lipidosis in mice, with massive deposition of cholesterol in both alveolar macrophages and type 2 cells and the accumulation of excessive surfactant phospholipids. These observations are consistent with ABCG1 controlling cellular sterol metabolism. Herein, we report on the progressive and chronic inflammatory process that accompanies the lipidosis in the lungs of Abcg1-/- mice. Compared with wild-type animals, the lungs of aged chow-fed mice deficient in ABCG1 show distinctive signs of inflammation that include macrophage accumulation, lymphocytic infiltration, hemorrhage, eosinophilic crystals, and elevated levels of numerous cytokines and cytokine receptors. Analysis of bronchoalveolar lavages obtained from Abcg1-/- mice revealed elevated numbers of foamy macrophages and leukocytes and the presence of multiple markers of inflammation including crystals of chitinase-3-like proteins. These data suggest that cholesterol and/or cholesterol metabolites that accumulate in Abcg1-/- lungs can trigger inflammatory signaling pathways. Consistent with this hypothesis, the expression of a number of cytokines was found to be significantly increased following increased cholesterol delivery to either primary peritoneal macrophages or Raw264.7 cells. Finally, cholesterol loading of primary mouse macrophages induced cytokine mRNAs to higher levels in Abcg1-/-, as compared with wild-type cells. These results demonstrate that ABCG1 plays critical roles in pulmonary homeostasis, balancing both lipid/cholesterol metabolism and inflammatory responses.