Acute lung injury (ALI) is a life-threatening condition in critically ill patients. Injury to the alveolar epithelium is a critical event in ALI, and accumulating evidence suggests that it is linked to proapoptotic Fas/FasL signals. Active soluble FasL (sFasL) is detectable in the bronchoalveolar lavage (BAL) fluid of patients with ALI, but the mechanisms controlling its bioactivity are unclear. We therefore investigated how the structure of sFasL influences cellular activation in human and mouse lungs and the role of oxidants and proteases in modifying sFasL activity. The sFasL in BAL fluid from patients with ALI was bioactive and present in high molecular weight multimers and aggregates. Oxidants generated from neutrophil myeloperoxidase in BAL fluid promoted aggregation of sFasL in vitro and in vivo. Oxidation increased the biological activity of sFasL at low concentrations but degraded sFasL at high concentrations. The amino-terminal extracellular stalk region of human sFasL was required to induce lung injury in mice, and proteolytic cleavage of the stalk region by MMP-7 reduced the bioactivity of sFasL in human cells in vitro. The sFasL recovered from the lungs of patients with ALI contained both oxidized methionine residues and the stalk region. These data provide what we believe to be new insights into the structural determinants of sFasL bioactivity in the lungs of patients with ALI.