The purpose of this study was to determine the accuracy of elevated concentrations of endotoxin in bronchoalveolar lavage (BAL) fluid for the diagnosis of gram-negative pneumonia. Sixty-three hospitalized adults underwent 71 evaluations with BAL using quantitative cultures for suspected lung infection. A cutoff value of > 5 EU/ml for the concentration of endotoxin in BAL fluid yielded the best operating characteristics for the diagnosis of gram-negative pneumonia (sensitivity, 100%; specificity, 75.0%; area under receiver operating characteristic [ROC] curve, 0.88). Good diagnostic agreement was found between elevated concentrations of endotoxin in BAL fluid and microbiologically confirmed gram-negative pneumonia (kappa statistic, 0.64; concordance 83.1%). Gram stain examination of BAL fluid for the presence of gram-negative bacteria yielded inferior operating characteristics (sensitivity, 63.2%; specificity, 75.0%; area under ROC curve, 0.69). Poor diagnostic agreement was observed between BAL fluid Gram stain results and microbiologically confirmed gram-negative pneumonia (kappa statistic, 0.35; concordance, 71.8%). These findings suggest that a concentration of endotoxin in BAL fluid > 5 EU/ml is superior to Gram stain examination for the rapid identification of patients with gram-negative pneumonia.