The effects of chronic exposure to chrysotile asbestos on alveolar type II cells were examined in the lungs of Fischer 344 rats. Morphometric and three-dimensional analyses were used to characterize the alveolar type II cell and to determine the relationship of asbestos fiber localization to ultrastructural change in these cells. During the 2-yr period of study, type II cell number and volume increased to values more than 4 times those seen in controls. Ultrastructurally, cisternal dilations of the rough endoplasmic reticulum (RER) composed 12% of the total cell volume after 12 mo of exposure to asbestos and was still 15% of the total cell volume 1 yr after fiber exposure had ended compared to less than 1% in control cells. Asbestos fiber density surrounding these cells was directly proportional to the degree of cisternal dilatation in the cell; however, lamellar body volume and number in these cells were not different from that found in control type II cells. The incidence of a subset of type II cells with large lamellated inclusions was 10-fold greater in regions near bronchiolar-alveolar duct junctions, compared to more distal gas exchange regions of the lungs. Normal-sized lamellar bodies were fused to these large lamellated inclusions. These cells also contained significantly greater numbers of lamellar bodies and multivesicular bodies than those type II cells in more distal lung regions. These ultrastructural changes observed in type II cells may be a simple dose response to inhaled asbestos or the manifestation of two distinct populations of cells in the lungs that respond to asbestos in different ways. Asbestos fiber dose, cellular microenvironment, and aberrations of the cell plasma membrane and/or cell cytoskeleton (i.e., microtubules and filaments) are discussed as potential factors in the changes noted in type II cells.