Mortality during the first several days of pneumococcal pneumonia has not decreased appreciably over the past 30 years, despite the widespread use of antibiotics. Disruption of the alveolar epithelial barrier is likely an initial step in the pathogenesis of pneumococcal pneumonia. We report that soluble factors from Streptococcus pneumoniae can directly injure isolated rat alveolar epithelial cells. Using biochemical and immunological techniques, we identified pneumolysin as a major soluble S. pneumoniae toxin for alveolar epithelial cells. Alveolar epithelial cells at 24 or 72 h after isolation were equally sensitive to injury by purified pneumolysin. Purified pneumolysin substantially increased alveolar permeability in an isolated perfused rat lung model. Electron microscopy revealed that instilled pneumolysin caused widespread lung injury, primarily to type I alveolar epithelial cells. Pneumolysin toxicity to alveolar epithelial cells may be important in the pathogenesis of acute lung injury during pneumococcal pneumonia and may facilitate pneumococcal bacteremia.