In previous experiments, a good relationship was demonstrated between the amount of airborne bacterial endotoxin and acute reactions after exposure to organic dusts. In the present study, 77 naive subjects were exposed to isolated endotoxin (IE) or endotoxin attached to bacterial cells (CE). Both preparations were obtained from Enterobacter agglomerans, which is a major bacterial species in many organic dusts. The major physiologic effect caused was a dose-related decrease in transfer factor, as measured by carbon monoxide diffusion. Half of the subjects reported fever and about one-third a subjective feeling of chest tightness. The exposure also caused a dose-related but small decrease in FEV1. A slightly increased bronchial reactivity was demonstrated at 4 h after endotoxin exposure. The minute volume after CO2 exposure was marginally affected. The results further support the conclusions from epidemiologic and experimental studies that the bacterial endotoxin is responsible for the acute reactions seen after exposure to many organic dusts, including that derived from cotton.