Gram-negative sepsis is the most common cause of the adult respiratory distress syndrome (ARDS). Lipopolysaccharide (LPS) when administered in vivo produces pathophysiologic changes similar to those seen in ARDS. The pathogenesis of these changes is mediated in part by oxidative stress. We demonstrate that LPS induces high mRNA levels of the stress-inducible gene heme oxygenase-1 (HO-1) in the rat lung. Increased HO-1 mRNA levels correlate with increased HO-1 protein and enzyme activity. Immunohistochemical analyses of lung tissues from rats treated with LPS reveal abundant HO-1 expression in inflammatory and bronchoalveolar epithelial cells. We further examined the molecular regulation of HO-1 gene expression after exposure of RAW 264.7 macrophage cells to LPS in vitro. These cells respond to LPS with increased HO-1 mRNA expression and HO-1 gene transcription. Transcriptional activation of the mouse HO-1 gene by LPS is mediated by a 5' distal enhancer fragment located approximately 4 kbp upstream from the transcription site. Electrophoretic mobility shift assays show increased activator protein-1 (AP-1) binding activity in RAW 264.7 cells after LPS treatment. Mutation of the AP-1 binding site in this enhancer fragment completely abolishes HO-1 gene activation while mutation of CCAAT/enhancer-binding protein (C/EBP) binding site exerts negligible effect, suggesting that the AP-1 family of transcription factors plays a critical role in regulating HO-1 gene activation following LPS treatment. Furthermore, upstream phosphorylation events modulate this AP-1-dependent expression of the HO-1 gene after LPS treatment.