Ruminal administration of 3-methylindole in goats severe pulmonary edema and respiratory distress. Electron microscopic studies of lungs reveal extensive degeneration and necrosis of alveolar membranous pneumocytes and bronchiolar epithelium. The necrosis of the pneumocytes is followed by proliferation of granular pneumocytes, which repopulate the alveolar basal lamina scaffold. 3-Methylindole may also induce proliferation of smooth endoplasmic reticulum in the remaining membranous pneumocytes and nonciliated columnar cells, indicating that these two cell types are involved in the xenobiotic function of the lung. The results suggest that 3-methylindole in cigarette smoke may play an important role in the pathogenesis of small airway disease and emphysema, and that patients with severe liver diseases or portocaval shunt may be predisposed to diffuse alveolar damage by 3-methylindole produced in the intestinal tract.