Although the accumulation of neutrophils in the lungs and airways is common to many inflammatory lung diseases, including acute lung injury, the alterations that neutrophils undergo as they leave the peripheral circulation and migrate into the lungs have not been well characterized. Human volunteers were exposed to endotoxin by bronchoscopic instillation. The resulting air space neutrophil accumulation and peripheral blood neutrophils were isolated 16 h later, compared with circulating neutrophils isolated before or after to the pulmonary endotoxin exposure, and compared with circulating neutrophils exposed to endotoxin in vitro. Microarray analysis was performed on air space, circulatory, and in vitro endotoxin-stimulated neutrophils. Functional analysis included the determination of neutrophil apoptosis, chemotaxis, release of cytokines and growth factors, and superoxide anion release. Dramatic gene expression differences were apparent between air space and circulating neutrophils: ∼15% of expressed genes have altered expression levels, including broad increases in inflammatory- and chemotaxis-related genes, as well as antiapoptotic and IKK-activating pathways. Functional analysis of air space compared with circulating neutrophils showed increased superoxide release, diminished apoptosis, decreased IL-8-induced chemotaxis, and a pattern of IL-8, macrophage inflammatory protein-1β, monocyte chemoattractant protein-1, and tumor necrosis factor-α release different from either unstimulated or LPS-stimulated circulating neutrophils. Many of these changes are not elicited by in vitro treatment with endotoxin. Limited differences were detected between circulating neutrophils isolated before and 16 h after pulmonary endotoxin instillation. These results suggest that neutrophils sequestered in the lung become fundamentally different from those resident in the circulation, and this difference is distinct from in vitro activation with endotoxin.