5 alpha-Reduction of testosterone was observed in lung cells obtained by bronchoalveolar lavage (greater than 95% macrophages) from the rats. This activity was inhibited by progesterone and corticosterone. Production of 17 beta-hydroxy-5 alpha-androstane-3-one and 5 alpha-androstane-3 alpha, 17 beta-diol from testosterone was higher in rat pulmonary alveolar macrophages than by the 800 g supernatant fraction of whole lung homogenate from the same animals. Alveolar macrophages from rats treated with the 5 alpha-reductase inhibitor 17 beta-N,N-diethylcarbamoyl-4-aza-4-methyl-5 alpha-androstane-3-one (5 mg/100 g b.w., s.c.) showed decreased metabolism of testosterone to 17 beta-hydroxy-5 alpha-androstane-3-one and 5 alpha-androstane-3 alpha, 17 beta-diol 4 h after treatment. This metabolism was also decreased in alveolar macrophages from rats exposed to potassium dichromate by intratracheal instillation. When bovine alveolar macrophages were incubated with potassium dichromate, 5 alpha-reduction of testosterone decreased significantly. The function of steroid 5 alpha-reduction in alveolar macrophages is currently not known.