Male Fischer 344 rats were exposed to 0.5 ppm ozone for 20 hr/day, 7 days/week, for 52 weeks after which they were allowed to recover in clean filtered air for 12 weeks. Pulmonary function testing, which included measurements of lung volumes, expiratory air flows, and DLCO, was performed before the initiation of exposure, after 26 and 52 weeks of exposure, and after the 12 week recovery. Control animals were tested at the same times but exposed only to clean filtered air. Another group, periodically sacrificed for histopathologic evaluation, was similarly exposed to ozone but allowed to recover in clean air for 24 weeks. The 52 weeks of ozone exposure produced small but statistically significant changes in several of the functional measurements when compared to clean air controls (FRC + 7.0%; RV + 11.2%; DLCO - 7.3%). These measurements returned to control levels with 3 months of recovery. All other parameters showed no significantly different values between the 2 groups throughout the exposure and recovery periods. After both 6 and 12 months of ozone exposure, microscopic evaluation revealed a slight inflammatory response in the alveolar duct walls and septa of the immediately adjacent alveoli. This response included the accumulation of mononuclear cells and fibroblasts, thickening of alveolar septa, and a slight increase in macrophage population. With 6 months of recovery, the inflammation had all but disappeared. There remained only a slight dilation and thickening of an occasional alveolar duct and its adjacent alveoli. We conclude that the functional changes seen in the lungs in response to the ozone insult were the result of the observed inflammation in the distal areas of the lung, and the lesions produced were reversible to the extent that they could not be detected functionally after recovery.