Propagation of inflammatory signals from the airspace to the vascular space is pivotal in lung inflammation, but mechanisms of intercompartmental signaling are not understood. To define signaling mechanisms, we microinfused single alveoli of blood-perfused rat lung with TNF-α, and determined in situ cytosolic Ca²⁺ concentration ([Ca²⁺]_i) by the fura-2 ratio method, cytosolic phospholipase A₂ (cPLA₂) activation and P-selectin expression by indirect immunofluorescence. Alveolar TNF-α increased [Ca²⁺]_i and activated cPLA₂ in alveolar epithelial cells, and increased both endothelial [Ca²⁺]_i and P-selectin expression in adjoining perialveolar capillaries. All responses were blocked by pretreating alveoli with a mAb against TNF receptor 1 (TNFR1). Crosslinking alveolar TNFR1 also increased endothelial [Ca²⁺]_i. However, the endothelial responses to alveolar TNF-α were blocked by alveolar preinjection of the intracellular Ca²⁺ chelator BAPTA-AM, or the cPLA₂ blockers AACOCF₃ and MAFP. The gap-junction uncoupler heptanol had no effect. We conclude that TNF-α induces signaling between the alveolar and vascular compartments of the lung. The signaling is attributable to ligation of alveolar TNFR1 followed by receptor-mediated [Ca²⁺]_i increases and cPLA₂ activation in alveolar epithelium. These novel mechanisms may be relevant in the alveolar recruitment of leukocytes.