Lung inflammation such as in ARDS and ALI causes accumulation of alveolar fluid, which hampers oxygen diffusion to alveolar epithelium. Hypoxia and inflammation have been shown to increase alveolar permeability. The mechanisms are poorly understood. We tested whether presence of alveolar macrophages is required to increase alveolar permeability in LPS-induced inflammation and whether hypoxia aggravates this effect. Primary rat alveolar epithelial cells (ATII) were cultured on filters in absence and presence of alveolar macrophages (MA) and were exposed to hypoxia (1.5% O2) for 24h with and without treatment with LPS (1mg/ml). The permeability to fluorescein and FITC-albumin and the transepithelial electrical resistance (TEER) were measured as indicator of barrier tightness. TEER was decreased significantly by LPS. The effect was increased by the presence of MA and by hypoxia. MA, LPS, and hypoxia alone did not affect AT2 cell fluorescein and FITC-albumin permeability. LPS in presence of MA significantly increased permeability (+ 70%). Hypoxia did not aggravate the LPS effect in absence and presence of MA but increased the permeability of MA-AT2 co-cultures in absence of LPS. Effects of LPS and MA were more pronounced when applied to the basolateral than to the apical side. Together these results indicate that LPS-induced signals from MA increased alveolar permeability to small and large molecules. In contrast to our hypothesis, hypoxia does not aggravate the MA/LPS- induced increase in alveolar epithelial permeability.