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Lipocortin I mediates, in part, the anti-inflammatory effects of corticosteroids. To determine whether alveolar epithelial cells produce lipocortin I, we used a highly specific anti-lipocortin I antibody and found by the techniques of Western blotting and immunocytochemical analysis that lipocortin I is a normal constituent of type II alveolar epithelial cells and that it constitutes approximately 0.1% of cell lysate proteins. Two separate species of lipocortin I were identified, migrating with molecular weights of 37 and 32 kD. Dexamethasone caused a dose-dependent increase in lipocortin I in rat alveolar epithelial cells, and its effect was maximal at a dose of 10−5 M. This effect was specific for corticosteroids since it was not seen with other steroids. These studies suggest that lipocortin I may mediate, in part, the immunosuppressive effects of corticosteroids in the lower respiratory tract.